guaranty trust bank plc and subsidiary companies · 2018-05-15 · core values to its employees...

Guaranty Trust Bank Plc and Subsidiary Companies

Group Interim Financial Statements

Together with Directors’ and Auditor’s Reports

June 2013

Guaranty Trust Bank and Subsidiary Companies

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Introduction Guaranty Trust Bank’s Interim Financial Statements complies with the applicable legal requirements of the Nigerian Securities and Exchange Commission regarding interim financial statements and comprises Separate and Consolidated Financial Statements of the Bank and the Group for the two quarters ended 30 June 2013.The consolidated financial statements have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ its interpretation issued by the International Accounting Standards and adopted by the Financial Reporting Council of Nigeria. In compliance with the provisions of that standard, it also includes unaudited current quarter income statements. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.


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Table of contents Page Corporate Governance 1 -17

Sustainability Report 18-19

Complaints and Feedback 20-22

Internal control and Risk Management Systems in relation to the financial reporting 23-25

Directors’ Report 26-34

Statement of Directors’ Responsibilities 35

Report of the Audit Committee 36 Independent Auditor’s Report 37 Financial statements: 39 Statement of financial position 40-41

Income Statement 42-43 Statement of Comprehensive Income 44 3 Months Income Statement 45-46 3 Months Statement of Comprehensive Income 47 Consolidated Statement of Changes in Equity 48-49 Statement of Changes in Equity- Parent 50-51

Statement of Cash-Flows 52-53 Reporting Entity 54 Basis of Preparation 54 Significant Accounting Policies 54

Other Accounting policies 58-78 Financial Risk Management 79

Credit risk 83

Liquidity risk 121

Settlement risk 127

Market risk 127

Foreign currency risk 147

Operational risk 155 Capital Management 161 Use of Estimates and Judgments 162


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Statement of Prudential Adjustments 169 Operating Segments 170 Financial Assets and Liabilities 182 Notes to the Statement of Comprehensive Income and the Statement of Financial Position 186 Contingencies 243 Group entities 245 Related parties 247

Regulatory requirements under the IFRS regime 252

Value-Added Statement 258

GROSS EARNINGS PROFIT ON ORDINARY ACTIVITIES BEFORE TAX

N124.2 billion

Group Group Increased / Bank Bank Increased /

Jun-13 Jun-12 (Decreased) Jun-13 Jun-12 (Decreased)

N' Million N' Million % N' Million N' Million %

Major Profit and Loss Account Items

Gross Earnings 124,202 113,527 9.4 115,161 106,122 8.5

Profit before tax on continuing operations 57,364 53,636 7.0 54,439 52,848 3.0

Profit after tax 49,015 45,552 7.6 47,112 44,707 5.4

Earnings per share (Naira) 1.73 1.59 1.60 1.52

Group Group Increased / Bank Bank Increased /

Jun-13 Dec-12 (Decreased) Jun-13 Dec-12 (Decreased)

N' Million N' Million % N' Million N' Million %

Major Balance Sheet Items

Deposits from customers 1,254,445 1,148,197 9.3 1,158,422 1,054,123 9.9

Loans and advances to customers 894,863 779,050 14.9 848,310 742,437 14.3

Total assets 1,860,494 1,734,878 7.2 1,736,556 1,620,317 7.2

Total equity 296,949 283,441 4.8 299,138 288,154 3.8

RESULT AT A GLANCE

N57.36 billionPROFIT AFTER TAX

N49.01 billion

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Corporate Governance Guaranty Trust Bank and Subsidiary Companies

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Corporate Governance Introduction Guaranty Trust Bank Plc (“the Bank”) believes the fundamental purpose of any company is the creation and delivery of long-term sustainable value in a manner consistent with our obligations as a responsible corporate citizen. The Bank therefore views corporate governance not as an end in itself but a vital facilitator to the creation of long- term value for our stakeholders. The Bank is conscious that value creation is influenced by many factors both external and internal and that is why the Bank continues to review its corporate governance processes and practices carefully to ensure that they are fit for purpose. In reviewing our corporate governance practices, our aim is to understand the external factors that present risks and opportunities for our business in order to ensure our strategy is appropriate; building strong and stable relationship with our customers, employees and suppliers; and ensuring that we manage our risks and resources including capital appropriately. Over the years, the Bank has built an enviable reputation as an institution which has consistently adopted, implemented and applied international best practices in corporate governance, service delivery and value creation for all its stakeholders. Our guiding principles (“the Orange Rules”) are Simplicity, Professionalism, Service, Friendliness, Excellence, Trustworthiness, Social Responsibility and Innovation. These Principles, on which the Bank was founded, remain the bedrock upon which we have built and developed our exemplary corporate governance practices. At Guaranty Trust Bank plc, the principles of good corporate governance practices remain one of our core values and an important ingredient in creating and sustaining shareholder value, while ensuring that behaviour is ethical, legal and transparent. As a company publicly quoted on the Nigerian Stock Exchange with Global Depositary Receipts (GDRs) listed on the London Stock Exchange, the Bank remains focused on its responsibilities and commitment to protect and increase shareholder value through transparent corporate governance practices. The Bank has over time developed policies and structures which help ensure compliance with laws and regulations and provide a clear line of sight for decision making and accountability which imbibe local regulatory standards as well as international best practices. The Bank ensures compliance with the Code of Corporate Governance for Public Companies issued by the Securities and Exchange Commission with effect from April, 2011 (“the SEC Code”), the Code of Corporate Governance for Banks in Nigeria Post Consolidation issued by the Central Bank of Nigeria (“the CBN Code”), as well as disclosure requirements under the Disclosure and Transparency Rules of the Financial Services Authority (FSA), United Kingdom, which are applicable to non-United Kingdom companies with Global Depositary Receipts (GDRs) listed on the London Stock Exchange. In order to remain a pace setter in the area of good corporate governance practices, the Bank continuously reviews its Code to align with additional legal and regulatory requirements and global best practices. In addition to the code of corporate governance the Bank aggressively promotes the Bank’s core values to its employees through its Code of Professional Conduct and in furtherance of this, the Board of Directors of the Bank recently approved an Ethics Policy which would regulate employee relations with internal and external parties. This is a pointer to the Bank’s dogged determination to ensure that its employees remain professional at all times in their business practices and ethics. In compliance with the requirements of the Central Bank of Nigeria (CBN), the Bank undertakes monthly internal reviews of its compliance status with defined corporate governance practices and submit reports on the Bank’s compliance status to the CBN and the Nigeria Deposit Insurance Corporation. An annual Board Appraisal is also conducted by an Independent Consultant appointed by the Bank whose report is


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submitted to the CBN and presented to Shareholders at the Annual General Meeting of the Bank in compliance with the provisions of the CBN Code of Corporate Governance. The Bank fosters a culture of openness in which healthy debate is encouraged and employees are expected to report improper activity. As the Bank continues to work towards serving customers, clients and communities and generate returns for stakeholders, we are guided by our creed that success is only meaningful when it is achieved the right way with the right values. Our commitment to this principle is for us the key to sustaining public trust and confidence in our Bank and the key to our continued long-term success. Governance Structure The Board The ultimate responsibility for the governance of the Bank resides with the Board of Directors which is accountable to shareholders for creating and delivering sustainable value through the management of the Bank’s business. The Board is also responsible for the management of the Bank’s relationship with its various stakeholders. In order to deliver on its strategic objectives the Bank needs the right people and one of the Bank’s key priorities is to ensure that we continue to have a Board and an executive management team with the appropriate skills, knowledge and experience to operate effectively in an ever challenging environment. One way to ensure that we continue to have the right people is to have a rigorous appointment and an effective succession planning process in place for Board and key management roles.

In addition to the Board’s direct oversight, the Board exercises its oversight responsibilities through five (5) Committees, namely, Board Risk Management Committee, Board Credit Committee, Board Human Resources and Nomination Committee, Board Remuneration Committee, Board Information Technology Strategy Committee. The Audit Committee of the Bank, which comprises equal numbers of representatives of the Board and Shareholders, also performs its statutory role as stipulated by the Companies and Allied Matters Act (2004).

The Board Committees play an important role in working with Management to ensure that the Bank is financially strong, well governed and risks are identified and well mitigated. The Board through the instrumentality of its Committees working closely with Management ensures that the Bank generates income in a sustainable way and risks are managed properly without eroding the controls in place.

Through these Committees, interactive dialogue is employed to set broad policy guidelines, and to ensure the proper management and direction of the Bank on a regular basis. The Bank’s Board is made up of a crop of seasoned professionals, who have excelled in their various professions including banking, accounting, pharmacy, engineering, oil and gas as well as law, and possesses the requisite integrity, skills and experience to bring to bear independent judgment on the deliberations of the Board. The Board comprises fourteen members, eight (8) of whom are Non-Executive Directors (including the Chairman of the Board), while six (6) are Executive Directors. Two (2) of the Non-Executive Directors are “Independent Directors”, appointed based on criteria laid down by the CBN for the appointment of Independent Directors and the core values enshrined in the Bank’s Code of Corporate Governance. Both Independent Directors do not have any significant shareholding interest or any special business relationship with the Bank.


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The CBN Guidelines prescribe that the term of office of an Independent Director shall be four (4) years for a single term with a maximum of two consecutive terms if re-elected upon the expiration of the first term. The Board meets quarterly and additional meetings are convened as required. Material decisions may be taken between meetings by way of written resolutions, as provided for in the Articles of Association of the Bank. The Directors are provided with comprehensive group information at each of the quarterly Board meetings and are also briefed on business developments between Board meetings. The Board met two (2) times during the period ended June 30, 2013. Responsibilities of the Board The Board determines the strategic objectives and policies of the Bank to deliver long-term value by providing overall strategic direction within a framework of rewards, incentives and controls. The Board also ensures that Management strikes an appropriate balance between promoting long-term growth and delivering short-term objectives. In fulfilling its primary responsibility, the Board is aware of the importance of achieving a balance between conformance to governance principles and economic performance. Powers reserved for the Board include the approval of quarterly, half-yearly and full year financial statements (whether audited or unaudited) and any significant change in accounting policies and/or practices; appointment or removal of Company Secretary; approval of major change to the Bank’s corporate structure (excluding internal reorganizations) and changes relating to the Bank’s capital structure or its status as a public limited company; the determination and approval of the strategic objectives and policies of the Bank to deliver long-term value; approval of the Bank’s strategy, medium and short term plan and its annual operating and capital expenditure budget; recommendation to shareholders of the appointment or removal of auditors and the remuneration of Auditors; approval of resolutions and corresponding documentation for shareholders in general meeting(s), shareholders circulars, prospectus and principal regulatory filings with the regulators. Other powers reserved for the Board are the determination of Board structure, size and composition, including appointment and removal of Directors, succession planning for the Board and senior management and Board Committee membership; approval of mergers and acquisitions, branch expansion and establishment of subsidiaries; approval of remuneration policy and packages of the Managing Director and other Board members, appointment of the Managing Director and other Directors of subsidiaries nominated by the Bank; approval of the Board performance evaluation process, corporate governance framework and review of the performance of the Managing Director; approval of policy documents on significant issues including Enterprise-wide Risk Management, Human Resources, Credit, Corporate governance and Anti – Money laundering, and approval of all matters of importance to the Bank as a whole because of their strategic, financial, risk or reputational implications or consequences. Roles of Chairman and Chief Executive The roles of the Chairman and Chief Executive are separate and no one individual combines the two positions. The Chairman’s main responsibility is to lead and manage the Board to ensure that it operates effectively and fully discharges its legal and regulatory responsibilities. The Chairman is responsible for ensuring that Directors receive accurate, timely and clear information to enable the Board take informed decisions: monitor effectively and provide advice to promote the success of the Bank. The Chairman also facilitates the contribution of Directors and promotes effective relationships and open communications


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between Executive and Non-Executive Directors, both inside and outside the Boardroom. The Board has delegated the responsibility for the day-to-day management of the Bank to the Managing Director/Chief Executive Officer, who is supported by Executive Management, comprising the Executive Directors. The Managing Director executes the powers delegated to him in accordance with guidelines approved by the Board of Directors. Executive Management is accountable to the Board for the development and implementation of strategies and policies. The Board regularly reviews group performance, matters of strategic concern and any other matter it regards as material. Director Nomination Process The Criteria for the desired experience and competencies of new Directors is agreed upon by the Board, upon the recommendation of the Board Human Resources and Nomination Committee which is charged with the responsibility of leading the process for Board appointments and for identifying and nominating suitable candidates for the approval of the Board.

The balance and mix of appropriate skills and experience of Non-Executive Directors is taken into account when considering a proposed appointment. In reviewing Board composition, the Board ensures a mix with representatives from different industry sectors. The following core values are considered critical in nominating a new Director; (i) Integrity (ii) Professionalism (iii) Career Success (iv) Recognition (v) Ability to add value to the Bank. Shareholding in the Bank is not considered a criterion for the nomination or appointment of a Director. The appointment of Directors is subject to the approval of the Central Bank of Nigeria. Induction and Continuous Training On appointment to the Board and to Board Committees, all Directors receive a formal induction tailored to meet their individual requirements. The induction, which is arranged by the Company Secretary, may include meetings with senior management staff and key external advisors, to assist Directors in building a detailed understanding of the Bank’s operations, its strategic plan, its business environment, the key issues the Bank faces, and to introduce Directors to their fiduciary duties and responsibilities.

Training and education of Directors on issues pertaining to their oversight functions is a continuous process, in order to update their knowledge and skills and keep them informed of new developments in the Bank’s business and operating environment. The Bank attaches great premium to training its Directors; five (5) Non-Executive Directors attended foreign and local courses during the period ended June 30, 2013. Changes on the Board During the period under review, the erstwhile Chairman of the Board, Mr. O. S. Oduyemi, retired from the Board of Directors at the end of the Annual General Meeting held on April 25, 2013, in compliance with the provisions of the Code of Corporate Governance of the Bank which stipulates that Non-


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Executive Directors shall retire from the Board upon attaining the age of seventy (70) years. Subsequent upon the retirement of the erstwhile Chairman, the Board of Directors appointed Mr. Imomoh as the Chairman of the Board, in line with the well defined succession plan of the Company. The Board also appointed Mrs. Osaretin Afusat Demuren as a Non-Executive Director to fill the vacancy created by the retirement of Mr. Oduyemi. Her appointment has been approved by the Central Bank of Nigeria. Mrs. Demuren holds a Masters Degree in Economics and Statistics from the Moscow Institute of Economics and Statistics, Moscow, and a Diploma in Russian Language and Preliminary Studies from the Kiev State University, Kiev. She had a successful career with the Central Bank of Nigeria which spanned over 33 years, during which she served as Director, Trade and Exchange Department and was deployed to serve as the Director, Human Resource Department in 2004, a position which she held until her retirement from the Central Bank of Nigeria in December, 2009. She was the first female Director of the Central Bank of Nigeria. She is a member of many professional associations including the Society for Human Resource Management of America, Nigerian Statistical Association, and Chartered Institute of Personnel Management of Nigeria and the Chartered Institute of Bankers of Nigeria. The appointment of Mrs. Demuren will be presented for shareholders’ for approval at the next Annual General Meeting of the Bank. Non-Executive Directors Remuneration The Bank’s policy on remuneration of Non-Executive Directors is guided by the provisions of the CBN Code which stipulates that Non-Executive Directors’ remuneration should be limited to sitting allowances, Directors’ fees and reimbursable travel and hotel expenses.

Details of remuneration paid to Executive and Non-Executive Directors is contained in Note 47 of this Interim Report. Board Committees The Board carries out its responsibilities through its Standing Committees, which have clearly defined terms of reference, setting out their roles, responsibilities, functions and scope of authority. The Board has five (5) Standing Committees in addition to the Audit Committee of the Bank, namely; Board Risk Management Committee, Board Credit Committee, Board Human Resources and Nomination Committee, Board Remuneration Committee, Board Information Strategy Committee. Through these Committees, the Board is able to more effectively deal with complex and specialized issues, and to fully utilize its expertise to formulate strategies for the Bank. The Committees make recommendations to the Board, which retains responsibility for final decision making. All Committees in the exercise of their powers so delegated conform to the regulations laid down by the Board, with well defined terms of reference contained in the Charter of each Committee. The Committees render reports to the Board at the Board’s quarterly meetings. A summary of the roles, responsibilities, composition and frequency of meetings of each of the Committees are as stated hereunder:


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Board Risk Management Committee This Committee is tasked with the responsibility of setting and reviewing the Bank’s risk policies. The coverage of supervision includes the following: credit risk, reputation risk, operations risk, technology risk, market and rate risks, liquidity risk and other pervasive risks as may be posed by the events in the industry at any point in time. The Terms of Reference of the Board Risk Management Committee include:

o To review and recommend for the approval of the Board, the Bank’s Risk Management Policies including the risk profile and limits;

o To determine the adequacy and effectiveness of the Bank’s risk detection, measurement systems

and controls; o To evaluate the Group’s internal control and assurance framework annually, in order to satisfy itself

on the design and completeness of the framework relative to the activities and risk profile of the Bank and its subsidiaries ;

o To oversee Management’s process for the identification of significant risks across the Bank and the

adequacy of risk mitigation, prevention, detection and reporting mechanisms; o To review and recommend to the Board for approval, the contingency plan for specific risks; o To review the Bank’s compliance level with applicable laws and regulatory requirements which may

impact on the Bank’s risk profile; o To conduct periodic review of changes in the economic and business environment, including

emerging trends and other factors relevant to the Bank’s risk profile; o To handle any other issue referred to the Committee from time to time by the Board. The Chief Risk Officer of the Bank presents regular briefings to the Committee at its meetings. The Committee meets quarterly and additional meetings are convened as required. The Committee met two (2) times in the period ended June 30, 2013. The Board Risk Management Committee comprised the following members during the period under review: S/No Name Status Designation 1 Dr. (Mrs.) S. C. Okoli Non-Executive Director Chairman 2 Mr. J. K. O. Agbaje Managing Director Member 3 Mr. A. F. Alli Non-Executive (Independent) Director Member 4 Mrs. Demuren Non-Executive Director Member 5 Mr. A. A. Odeyemi Executive Director Member 6 Mrs. O. O. Omotola Executive Director Member


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Board Credit Committee This Committee is responsible for approval of credit facilities in the Bank. The Terms of Reference of the Board Credit Committee include:

o To consider and approve specific loans above the Management Credit Committee’s authority limit, as determined by the Board from time to time

o To review Management Credit Committee’s authority level as and when deemed necessary and

recommend new levels to the Board for consideration;

o To conduct quarterly review of credits granted by the Bank to ensure compliance with the Bank’s internal control systems and credit approval procedures;

o To notify all Director related loans to the Board;

o To monitor and notify the top debtors to the attention of the Board

o To review the Bank’s internal control procedures in relation to credit risk assets and ensure that

they are sufficient to safeguard the quality of the Bank’s risk assets;

o To review the Asset and Liability Management of the Bank;

o To ensure that the Bank complies with regulatory requirements regarding the grant of credit facilities;

o To handle any other issue referred to the Committee from time to time by the Board.

In view of the volume of transactions that require Board Credit Committee approvals, there are instances where the need arises for credits to be approved by members expeditiously between Board Credit Committee Meetings. Such urgent credits are circulated amongst the members for consideration and approval in line with a defined procedure that ensures that all members of the Committee are furnished with full information on such credits. All credits considered as “Large Exposures” as defined by the Board of Directors from time to time are considered and approved by the Board Credit Committee at a special meeting convened for that purpose. The Board Credit Committee meets at least once in each quarter. However, additional meetings are convened as required. The Committee met five (5) times during the period ended June 30, 2013. The Board Credit Committee is made up of the following members:

S/No Name Status Designation 1 Mr. A. O. Akintoye Non-Executive (Independent) Director Chairman 2 Mrs. C. N. Echeozo Deputy Managing Director Member 3 Mr. K. A. Adeola Non-Executive Director Member 4 Mr. O. M. Agusto Non-Executive Director Member 5 Mr. I. Hassan Non-Executive Director Member 6 Mr. O. Ohiwerei Executive Director Member 7 Mr. A. A. Oyedeji Executive Director Member


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Board Human Resources and Nominations Committee This Committee is responsible for the approval of the human resources matters, identification and nomination of candidates for appointment to the Board and board governance issues such as annual evaluation of the performance of the Managing Director and the Board, induction and continuous education, approval of promotion of top management staff, corporate governance, succession planning, conflicts of Interest situations and compliance with legal and regulatory provisions. The Committee is also responsible for the oversight of strategic people issues, including employee retention, equality and diversity as well as other significant employee relations matters. The membership of the Committee is as follows: S/No Name Status Designation 1 Mr. A. F. Alli Non-Executive (Independent) Director Chairman 2 Mr. J.K.O. Agbaje Managing Director Member 3 Mr. A. O. Akintoye Non-Executive (Independent) Director Member 4 Mr. I. Hassan Non-Executive Director Member 5 Dr. (Mrs) S. C. Okoli Non-Executive Director Member 6 Mrs. O. O. Omotola Executive Director Member

The Committee met twice during the period under review. Board Remuneration Committee The Board Remuneration Committee has the responsibility of setting the parameters of Remuneration Policy across the Bank, determining the policy of the Bank on the remuneration of the Managing Director and other Executive Directors and the specific remuneration packages and to approve the policy relating to all remuneration schemes and long term incentives for employees of the Bank. The Board Remuneration Committee comprised the following members during the period under review: S/No Name Status Designation 1 Mr. O. M. Agusto Non-Executive Director Chairman 2 Mr. K. A. Adeola Non-Executive Director Member

The Committee met once during the period under review. Board Information Technology Strategy Committee The Board Information Technology Strategy Committee is responsible for the provision of strategic guidance to Management on Information Technology issues and monitoring the effectiveness and efficiency of Information Technology within the Bank and the adequacy of controls. The Terms of Reference of the Board Risk Management Committee include:


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o To provide advice on the strategic direction of Information Technology issues in the Bank;

o To inform and advise the Board on important Information Technology issues in the Bank;

o To monitor overall Information Technology performance and practices in the Bank.

The Board Information Technology Strategy Committee comprised the following members during the period under review: S/No Name Designation Designation

1 Mr K. A. Adeola Chairman Chairman 2 Mr J. K. O. Agbaje Managing Director Member 3 Mr A. A. Odeyemi Executive Director Member 4 Mr O. Ohiwerei Executive Director Member The Committee met once during the period under review. Audit Committee of the Bank This Committee is responsible for ensuring that the Bank complies with all the relevant policies and procedures both from the regulators and as laid-down by the Board of Directors. Its major functions include the approval of the annual audit plan of the internal auditors, review and approval of the audit scope and plan of the external auditors, review of the audit report on internal weaknesses observed by both the internal and external auditors during their respective examinations and to ascertain whether the accounting and reporting policies of the Bank are in accordance with legal requirements and agreed ethical practices. The Committee also reviews the Bank’s annual and interim financial statements, particularly the effectiveness of the Bank’s disclosure controls and systems of internal control as well as areas of judgment involved in the compilation of the Bank’s results. The Committee is responsible for the review of the integrity of the Bank’s financial reporting and oversees the independence and objectivity of the external auditors. The Committee has access to external auditors to seek explanations and additional information, while the internal and external auditors have unrestricted access to the Committee, which ensures that their independence is in no way impaired. The Committee is made up of three (3) Non-Executive Directors and three (3) Shareholders of the Bank appointed at Annual General Meetings, while the Chief Inspector of the Bank serves as the secretary to the Committee. The membership of the Committee at the Board level is based on relevant experience of the Board members, while one of the shareholders serves as the Chairman of the Committee. The internal and external auditors are invited from time to time to attend the Meetings of the Committee. The Chief Financial Officer and appropriate members of Management also attend the meetings upon invitation. The Committee meets at least four (4) times in a year. The Audit Committee of the Bank met two (2) times during the period.


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The following members served on the Committee during the period ended June 30, 2013: S/No Name Status Designation Attendance 1 Mr. A. B. Akisanmi* Shareholders’ Representative Chairman 1 2 Alhaji M.F. Lawal** Shareholders’ Representative Chairman 1 3 Alhaji M. O. Usman Shareholders’ Representative Member 2 4 Mrs. S. O. J. Mbagwu-Fagbemi Shareholders’ Representative Member 2 5 Mr. A. F Alli Non-Executive (Independent)

Member 2

6 Mr. O. M. Agusto Non-Executive Director Member 2 7 Mr. I. Hassan Non-Executive Director Member 2 * Mr. A.B. Akinsanmi was appointed as the Chairman of the Committee on April 25, 2013 **Alhaji M.F. Lawal served up till the AGM on April 25, 2013. Attendance of Board and Board Committee Meetings The table below shows the frequency of meetings of the Board of Directors and Board Committees, as well as Members’ attendance for the period ended June 30, 2013. S/N DIRECTORS BOARD BOARD CREDIT

COMMITTEE BOARD RISK

MANAGEMENT COMMITTEE

BOARD HUMAN

RESOURCES &

NOMINATION COMMITTEE

BOARD REMUNERATION

COMMITTEE

BOARD I. T.

STRATEGY

TOTAL

DATE OF MEETINGS Jan. 23, 2013,

April 17, 2013,

January 22, 2013, February

9, 2013, February 26,

2013 April 16, 2013 April 27, 2013

January 22, 2013

April 16, 2013

January 22, 2013

April 16, 2013 January 23, 2013

January 23, 2013

NUMBER OF MEETINGS

2 5 2 2 1 1 13

1 Mr.S.O. Oduyemi* 2 N/A N/A N/A N/A N/A 2

2 Mr. J. K. O Agbaje 2 N/A 2 2 N/A 1 7 3 Mrs. C. N. Echeozo 2 5 N/A N/A N/A N/A 7 4 Mr. E. U. Imomoh 2 N/A 2 N/A 1 N/A 5 5 Mr. A O. Akintoye 2 5 N/A 2 N/A N/A 9

6 Mr. A. F. Alli 2 N/A 2 2 N/A N/A 6 7 Dr (Mrs.) S. C.

Okoli 2 N/A 2 2 N/A N/A 6

8 Mr. O. M. Agusto 2 5 N/A N/A 1 N/A 8 9 Mr. K. A. Adeola 2 5 N/A N/A 1 1 9 10 Mr. I. Hassan 2 5 N/A 2 N/A N/A 9 11 Mr. A. A. Odeyemi 2 N/A 2 N/A N/A 1 5 12 Mr. O. Ohiwerei 2 5 N/A N/A N/A 1 8 13 Mrs. O. O. Omotola 2 N/A 2 2 N/A N/A 6 14 Mr. A. Oyedeji 2 5 N/A N/A N/A N/A 7 15 Mrs. O. A.

Demuren** 0 0 0 0 0 0 0

*Mr. S.O. Odeyemi retired from the Board of Directors at the end of the Annual General Meeting held on April 25, 2013. **There has been no Meeting after her appointment to the Board on April 17, 2013 N/A -Not Applicable


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Tenure of Directors In order to ensure both continuity and injection of fresh ideas, the tenure for Non-Executive Directors is limited to a maximum of three (3) terms of four (4) years each, i.e. twelve (12) years whilst the maximum tenure for Independent Non-Executive Directors is limited to a maximum of two (2) terms of four (4) years each, i.e. eight (8) years. This is in compliance with the directives of the CBN Code and international best practices. Board Appraisal In the Bank’s customary manner of imbibing the best corporate governance practices, the Board engaged an Independent Consultant, J. K. Randle International, to carry out the annual Board and Directors appraisal for the 2012 financial year. The annual appraisal covered all aspects of the Board’s structure, composition, responsibilities, processes, relationships, individual members’ competencies and respective roles in the Board performance, as well as the Bank’s compliance status with the provisions of the CBN and SEC Codes. The Independent Consultant adjudged the performance of the Board as outstanding and rated the performance of each individual Director as well above requirements. The Annual Board and Director Review/Appraisal Report for the 2012 financial year was presented to shareholders at the Annual General Meeting of the Bank held on April 25, 2013 and a copy sent to the Central Bank of Nigeria, in compliance with the requirements of the CBN Code. Shareholders The General Meeting of the Bank is the highest decision making body of the Bank. The Bank’s General Meetings are conducted in a transparent and fair manner. Shareholders have the opportunity to express their opinions on the Bank’s financial results and other issues affecting the Bank. The Annual General Meetings are attended by representatives of regulators such as the Central Bank of Nigeria, the Securities and Exchange Commission, The Nigerian Stock Exchange, Corporate Affairs Commission as well as representatives of Shareholders’ Associations. The Bank has an Investors Relations Unit, which deals directly with enquiries from shareholders and ensures that shareholders’ views are escalated to Management and the Board. In addition, quarterly, half-yearly and annual financial results are published in widely read national newspapers. The Bank ensures that institutional investors and international holders of the Global Depositary Receipts get frequent updates on the Bank’s progress via interactive conference calls, local and international investor presentations and meetings. These conference calls and investor meetings provide our investors with direct access to senior and executive Management. Protection of Shareholders Rights The Board ensures the protection of the statutory and general rights of shareholders at all times, particularly their right to vote at general meetings. All shareholders are treated equally, regardless of volume of shareholding or social status.


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Communication Policy The Board and Management of the Bank ensure that communication and dissemination of information regarding the operations and management of the company to shareholders, stakeholders and the general public is timely, accurate and continuous, to give a balanced and fair view of the Bank’s financial and non-financial matters. Such information, which is in plain language, readable and understandable, is available on the Bank’s website, www.gtbank.com. The website is constantly updated with information as events occur. The website also has an Investors Relations portal where the company’s Interim Reports and other relevant information about the company is published and made accessible to its shareholders, stakeholders and the general public. The main objective of the Bank’s Communication Policy is to support the Bank in achieving the overall goals described in the Bank’s core values which strengthens the Bank’s culture of transparency in pursuit of best corporate governance practices. In order to reach its overall goal on information dissemination, the Bank is guided by the following principles: (i) Compliance with Rules and Regulations: The Bank complies with the legislation and codes of

corporate governance of the jurisdictions within which it operates. These include the Banks and other Financial Institutions Act (BOFIA), the Companies and Allied Matters Act (CAMA) and the codes of Corporate Governance issued by the Central Bank of Nigeria as well as the Securities and Exchange Commission, the United Kingdom Listing Authority (“UKLA”) (by virtue of the listing of Global Depositary Receipts by the Bank on The London Stock Exchange in July 2007);

(ii) Efficiency: The Bank uses modern communication technologies in a timely manner to convey its

messages to its target groups. Synergies are sought when it comes to using different communication channels. The Bank replies without unnecessary delay to information requests by the media and the public;

(iii) Transparency: As an international financial institution, the Bank strives in its communication to

be as transparent and open as possible while taking into account the concept of confidentiality between the Bank and its customers, and bank secrecy. This contributes to maintaining a high level of accountability;

(iv) Pro-activity: The Bank proactively develops contacts with its target groups and identifies topics of

possible mutual interest; (v) Clarity: The Bank aims at clarity, i.e. to send uniform and clear messages on key issues; (vi) Cultural awareness: As an international financial institution, the Bank operates in a multicultural

environment and accordingly recognizes the need to be sensitive to the cultural peculiarities of its operating environment;

http://www.gtbank.com/�


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(vii) Feedback: The Bank actively and regularly seeks feedback on its image and communication activities both from the media as well as from its key target groups. This feedback is used to fine-tune communication activities.

Information Flows It is the responsibility of Executive Management under the direction of the Board, to ensure that the Board receives adequate information on a timely basis, about the Bank’s businesses and operations at appropriate intervals and in an appropriate manner, to enable the Board to carry out its responsibilities. The Company Secretary The Company Secretary provides a point of reference and support for all Directors. The Company Secretary also consults regularly with Directors to ensure that they receive required information promptly. The Board may obtain information from external sources, such as consultants and other advisers, if there is a need for outside expertise, via the Company Secretary or directly. The Company Secretary is also responsible for assisting the Board and Management in the implementation of the Code of Corporate Governance of the Bank, coordinating the orientation and training of new Directors and the continuous education of Non-Executive Directors; assisting the Chairman and Managing Director to formulate an annual Board Plan and with the administration of other strategic issues at the Board level; organizing Board meetings and ensuring that the minutes of Board meetings clearly and properly capture Board discussions and decisions. Independent Advice Independent professional advice is available, on request, to all Directors at the Bank’s expense when such advice is required to enable a Member of the Board effectively perform certain responsibilities. The Bank meets the costs of independent professional advice obtained jointly or severally by a Director or Directors where such advice is necessary to enable the obligations imposed on an individual, through membership of the Board, to be properly fulfilled. Insider Trading and price sensitive information Directors, insiders and their related persons in possession of confidential price sensitive information (“insider information”) are prohibited from dealing with the securities of the Bank where such would amount to insider trading. Directors, insiders and related parties are prohibited from disposing, selling, buying or transferring their shares in the Bank for a period commencing from the date of receipt of such insider information until such a period when the information is released to the public or any other period as defined by the Bank from time to time. Management Committees These are Committees comprising senior management staff of the Bank. The Committees are risk driven as they are basically set up to identify, analyze, synthesize and make recommendations on risks arising from day to day activities of the Bank. They also ensure that risk limits as contained in the Board and Regulatory policies are complied with at all times. They provide inputs for the respective Board Committees and also ensure that recommendations of the Board Committees are effectively and efficiently implemented. They meet as frequently as necessary to immediately take action and decisions


14

within the confines of their powers. The standing Management Committees in the Bank are:

o Management Risk Committee;

o Management Credit Committee;

o Criticized Assets Committee;

o Assets and Liability Management Committee;

o Information Technology (IT) Steering Committee;

o Information Technology (IT) Risk Management Committee. Management Risk Committee This Committee is responsible for regular analysis and consideration of risks in the Bank. The Committee meets from time to time and at least quarterly. However, additional meetings may be held if required. The Committee reviews and analyses environmental issues and policies impacting either directly or remotely on the Bank, brainstorms on such issues and recommends steps to be taken by the Bank. The Committee’s approach is risk based.

The Committee provides inputs for the Board Risk Management Committee and also ensures that the decisions and policies emanating from the Committee’s meetings are implemented. The mandate of the Committee includes;

o Reviews the effectiveness of GTBank’s overall risk management strategy at the enterprise level. o Follow-up on management action plans based on the status of implementation compiled by the

Management Risk Committee

o Identify and evaluate new strategic risks including corporate matters involving regulatory, business development issues, e.t.c., and agree on suitable mitigants.

o Review the enterprise risk scorecard and determine the risks to be escalated to the Board on a

quarterly basis.

Management Credit Committee This is the Committee responsible for ensuring that the Bank complies fully with the Credit Policy Guide as laid down by the Board of Directors. The Committee also provides inputs for the Board Credit Committee. This Committee reviews and approves credit facilities to individual obligors not exceeding an aggregate sum to be determined by the Board from time to time. The Management Credit Committee is responsible for reviewing and approving all credits that are above the approval limit of the Managing Director as determined by the Board. The Committee reviews the entire credit portfolio of the Bank and conducts periodic assessment of the quality of risk assets in the Bank. It also ensures that adequate monitoring of credits is carried out. The Committee meets weekly depending on the number of credit applications to be considered.


15

The secretary of the Committee is the Head of the Credit Administration Unit of the Bank. Criticized Assets Committee

This Committee is responsible for the assessment of the risk asset portfolio of the Bank. It highlights the status of the Bank’s assets in line with the internal and external regulatory framework, and directs appropriate actions in respect of delinquent assets. The Committee ensures that adequate provisions are taken in line with the regulatory guidelines. Assets and Liability Management Committee

This Committee is responsible for the management of a variety of risks arising from the Bank’s business including, market and liquidity risk management, loan to deposit ratio analysis, cost of funds analysis, establishing guidelines for pricing on deposit and credit facilities, exchange rate risks analysis, balance sheet structuring, regulatory considerations and monitoring of the status of implemented assets and liability strategies. The members of the Committee include the Managing Director, Executive Directors, the Treasurer, the Head of the Financial Control Group, the Chief Risk Officer as well as a representative of the Assets and Liability Management Unit. Information Technology (IT) Steering Committee The Committee is responsible for assisting Management with the implementation of IT strategy approved by the Board. The roles and responsibilities of the Committee include: 1. Planning, Budgeting and Monitoring

o Review and approve the Bank’s IT plan and budget (short and long term). o Review IT performance against plans and budgets, and recommend changes, as required. o Review, prioritize and approve IT investment initiatives. o Establish a balance in overall IT investment portfolio in terms of risk, return and strategy.

2. Ensuring Operational Excellence

o Provide recommendations to Management on strategies for new technology and systems. o Review and approve changes to IT structure, key accountabilities, and practices. o Ensure project priorities and success measures are clearly defined, and effectively monitored. o Conduct a review of exceptions and projects on selected basis. o Perform service catalogue reviews for continued strategic relevance. o Review and approve current and future technology architecture for the Bank. o Monitor service levels, improvements and IT service delivery. o Assess and improve the Bank’s overall IT competitiveness.

3. IT Risk Assurance

o Review and approve governance, risk and control framework. o Monitor compliance with defined standards and agreed performance metrics. o Ensure that vulnerability assessments of new technology are performed.


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o Reviewing and ensuring the effectiveness of the IT Risk Management and Security plan. o Ensuring the effectiveness of disaster recovery plans and review reports on periodic disaster

recovery testing. o Reviewing key IT risk and security issues relevant to the Bank’s IT processes / systems. o Ensuring the Bank’s compliance with relevant laws and regulations.

Information Technology (IT) Risk Management Committee The Information Technology Risk Management Committee is responsible for establishing standardised IT risk management practices and ensuring compliance, for institutionalising IT risk management in the Bank’s operations at all levels; and identifying and implementing cost effective solutions for IT risk mitigation. The Committee is also responsible for the continuous development of IT risk management expertise and ensuring that a proactive risk management approach is adopted throughout the Bank to drive competitive advantage. Monitoring Compliance with Corporate Governance Chief Compliance Officer The Chief Compliance Officer monitors compliance with money laundering requirements and the implementation of the Corporate Governance Code of the Bank. The Chief Compliance Officer together with the Chief Executive of the Bank certify each year to the Central Bank of Nigeria that they are not aware of any other violation of the Corporate Governance Code, other than as disclosed to the CBN during the course of the year. The Company Secretary and the Chief Compliance Officer forward monthly returns to the Central Bank of Nigeria on all whistle-blowing reports and corporate governance breaches. Whistle Blowing procedures In line with the Bank’s commitment to instill the best corporate governance practices, the Bank has established a whistle blowing procedure that ensures anonymity. The Bank has two (2) hotlines and a dedicated e-mail address for whistle-blowing procedures. The hotline numbers are 01-4480905 and 01- 4480906, and the email address is [email protected]

Internally, the Bank has a direct link on its Intranet (internal web page) for dissemination of information, to enable members of staff report all identified breaches of the Bank’s Code of Corporate Governance. Code of Professional Conduct for Employees The Bank has an internal Code of Professional Conduct which all members of staff are expected to subscribe to upon assumption of duties. Staff are also required to reaffirm their commitment to the Bank’s Code annually. All members of staff are expected to strive to maintain the highest standards of ethical conduct and integrity in all aspects of their professional life as contained in the Code of Professional Conduct which prescribes the common ethical standards, policies and procedures of the Bank relating to employee values.

mailto:[email protected]�


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Human Resources Policy The Human Resources policy of the Bank is contained in the Directors’ Report on page 30 of this Interim Report. Employee Share-ownership Scheme The Bank has in place an employee share ownership scheme called the Staff Investment Trust (SIT) scheme. Under the Bank’s Articles of Association, the Scheme is authorized to hold up to a specified percentage of ordinary shares of the Bank for the benefit of eligible employees of the Bank. The scheme was established for the benefit of the Bank’s staff as an incentive mechanism, by enabling eligible staff invest in ordinary shares of the Bank at a discount (the prevailing Net Assets Value (NAV)), and buying-back their stock from the Bank at the market price, subject to attaining a determined length of service at the point of disengagement from the Bank. Internal Management Structure The Bank operates an internal management structure where all officers are accountable for duties and responsibilities attached to their respective offices and there are clearly defined and acceptable lines of authority and responsibility.


Sustainability Report

18


Guaranty Trust Bank has had an Environmental and Social Management System (ESMS) Policy since 2002. The subsisting Board approved policy ensures that the Bank remains at the forefront of using its banking operations in influencing the sustainability behaviour of its stakeholders – customers, suppliers, workers and communities where it operates. As one of the drafters of and signatory to the Nigerian Sustainable Banking Principles, Guaranty Trust Bank has adopted these Principles which include:

Principle 1 | Our Business Activities1

We will integrate environmental and social considerations into decision-making processes relating to our Business Activities to avoid, minimise or offset negative impacts.

: Environmental and Social Risk Management

Principle 2 | Our Business Operations2: Environmental and Social Footprint3

We will avoid, minimise or offset the negative impacts of our Business Operations on the environment and local communities in which we operate and, where possible, promote positive impacts.

Principle 3 | Human Rights We will respect human rights in our Business Operations and Business Activities.

Principle 4 | Women’s Economic Empowerment We will promote women’s economic empowerment through a gender inclusive workplace culture in our Business Operations and seek to provide products and services designed specifically for women through our Business Activities.

Principle 5 | Financial Inclusion We will promote financial inclusion, seeking to provide financial services to individuals and communities that traditionally have had limited or no access to the formal financial sector.

Principle 6 | E&S Governance We will implement robust and transparent E&S governance practices in Guaranty Trust Bank and assess the E&S governance practices of our clients.

Principle 7 | Capacity Building We will develop individual, institutional and sector capacity necessary to identify, assess and manage environmental and social risks as well as opportunities associated with our Business Activities and Business Operations.

Principle 8 | Collaborative Partnerships We will collaborate across the sector and leverage international partnerships to accelerate our collective progress and move the sector as one, ensuring our approach is consistent with international standards and Nigerian development needs.

1Business Activities: The provision of financial products and services to clients including, but not limited to: corporate finance, investment banking (corporate advisory, structured lending and capital, trading), equity investments, project finance, project finance advisory, structured commodity finance, small and medium business lending, retail banking, trade and leasing, and other forms of direct lending. 2Business Operations: The undertakings of employees and the physical human capital, assets and infrastructure (e.g. offices, branches, equipment) that a Bank engages in the course of facilitating its Business Activities. This would also include suppliers, contractors and third party service providers engaged by a Bank in the course of facilitating its Business Operations and Business Activities. 3Environmental & Social Footprint: The total effect or impact that a Bank’s Business Operations have on the environment and society in which it operates (e.g. the amount of natural resources used, the amount of waste produced, or the effects on local/host communities or the Bank’s human capital).



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Principle 9 | Reporting We will regularly review and report on our progress in meeting these Principles at the individual institution and sector level. In addition to the foregoing, Guaranty Trust Bank conducts environmental and social due diligence on credit its requests against the performance standards of reputable international finance institutions (the International Finance Corporation’s (IFC) performance standard is the benchmark for the bank), the IFC Exclusive list and national laws and regulations. Guaranty Trust Bank has instituted a Sustainability Committee consisting of various Units and departments within the bank that meet quarterly to review and report the Bank’s Sustainability performance, make recommendations and collate information towards the Bank’s Annual Sustainability Report. Guaranty Trust Bank strategically builds and integrates sustainability into its financing and investing activities. Its leadership position also entrust it with the responsibility of creating awareness to its customers and other stakeholders.

Guaranty Trust Bank and Subsidiary Companies Complaints and Feedback

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Introduction Guaranty Trust Bank plc values its relationship with its customers and considers customers’ feedback as an important tool in gauging our customers’ response to our products and services. Over the years, the Bank has built the relationship with its customers, into a partnership that hinges on trust and friendliness. Feedback provided by customers is regarded as a necessary and important factor in our desire to always treat our customers fairly. Treating Customer Fairly (TCF) At Guaranty Trust Bank plc, we consider treating customers fairly a pivotal part of our business strategy. We believe that our customers are critical and key stakeholders in our business and we therefore ensure that fair treatment of all our customers forms an integral and important part of our business processes. In keeping with our vision to deliver the utmost in customer service, we have formulated some salient principles which guide every aspect of our relationship with our customers in ensuring that our customers are treated fairly at all times. These principles have been prepared to guide Management and employees in understanding the following: The essence of Treating Customers Fairly (TCF) The need for obtaining customers’ feedback The importance of providing feedback to Management to assist in decision making The relevance of self audit in monitoring TCF activities

Complaints and Feedback Channels In recognizing the need and importance of customers’ feedback, the Bank has made available various channels for customers to provide feedback on the Bank’s products, services and processes. The available platforms provided by the Bank include: The Complaints portal on the Bank’s website, Correspondence from customers, SMS from customers via the SMS unhappy platform, GTConnect (a 24 hours self service interactive call center), Social Media feedback platform

In addition to the social media platform established by the Bank, customers can also visit any of the Bank’s branches to provide their feedback.


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Resolution Structure The Bank’s complaints and feedback structure ensures the prompt resolution of customers’ complaints. The Bank has a dedicated Complaints Unit which is responsible for receiving prompt investigation and resolution of customers’ complaints. The Complaints Unit serves as the liaison between the Bank and its customers in ensuring that complaints are satisfactorily resolved. Complaints are stream-lined into various categories to ensure proper monitoring and efficient management. The process flow of customer complaints receipt and resolution is as follows: Upon receipt, a customer's complaint is duly and formally acknowledged; The complaint is reviewed to determine if it could be resolved at the point of receipt; Where a complaint can be resolved at the point of receipt, a resolution is provided to the

customer; If a complaint cannot be resolved at the point of receipt, the complaint is referred to the

appropriate unit in the Bank to handle; Upon resolution, the customer is contacted and the resolution is explained to the customer; The complaint is closed and marked as resolved.

Customers’ feedback on products The Bank also periodically evaluates public/customers’ opinion about our services, products and policies. The evaluation is conducted in various ways, including: One-on-one focus meetings with key customers. Interviews with select customers. Opinion cards placed in banking halls Questionnaires administered to customers.

This is to afford the Bank the opportunity of gaining customers’ perception about the Bank, and to intensify all efforts at ensuring that any identified gap in our service, process or product is closed. Feedback on customers’ complaints to the Bank Feedback on customers’ complaints is provided to the Management, relevant units and groups in the Bank to ensure that complaints and issues raised by customers do not reoccur. This serves as a learning point for the various units within the Bank on the Bank’s products and services. The feedback gathered ensures that:

The Bank retains its customers as such customers feel appreciated and respected; The quality of service delivery set by the Bank is maintained and made uniform across board; A reliable source of identifying improvement opportunities is presented to management; A reliable source of data on customers’ complaints and expectations is collated.


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The feedbacks are circulated through the Bank’s internal information channels for the general information of all staff. In addition, the Bank provides monthly reports to the Central Bank of Nigeria (CBN) in line with the CBN’s guidelines on resolution of customers’ complaints. Report of Complaints received and resolved by the Bank between January and June 2013 pursuant to CBN circular dated August 16, 2011.

Period

Number of Complaints

Received during the period

Number Resolved

Number not resolved but reported to CBN

for Intervention

Total Disputed Amounts

1st Quarter 1021 1021 nil nil 2nd Quarter 1212 987* nil nil * Majority of outstanding complaints as at June 30, 2013 are mainly international dispense errors or international card unauthorized transactions that are yet to be resolved by international card operators. International dispense errors require a minimum of 45 days for resolution.

Guaranty Trust Bank and Subsidiary Companies Internal control and Risk Management Systems

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Internal control and Risk Management Systems in relation to the financial reporting

Guaranty Trust Bank’s internal control and risk management systems ensure that material errors or inconsistencies in the financial statements are identified and corrected. The bank’s internal control framework is patterned after the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO) Framework.

COSO defines internal control as "a process effected by an entity's Board of Directors, Management and other personnel, to provide reasonable assurance regarding the achievement of objectives" in three categories--effectiveness and efficiency of operations; reliability of financial reporting; and compliance with applicable laws and regulations. The scope of internal control therefore extends to policies, plans, procedures, processes, systems, activities, functions, projects, initiatives, and endeavors of all types at all levels of the bank.

The internal control and risk management systems comprise the following areas:

Control Environment Risk Assessment Control Activities Information and Communication Monitoring

Control Environment The Bank has two Board Committees (Board Risk Committee and Board Credit Committee) that have oversight function on the Bank’s Risk Management Processes. The Committees are responsible for setting risk management policies that ensure material risks inherent in the Bank’s business are identified and mitigated or controlled. The Bank also has an Audit Committee which is made up of three shareholders and three Non- Executive Directors; one of the shareholders is the Chairman. The Audit Committee is therefore independent. Its oversight functions include among others, ensuring that quality accounting policies, internal controls, independent and objective statutory auditors are in place to prevent and detect fraud and material errors in financial reporting.

The Bank’s management committees are responsible for implementing risk management policies set out by the Board. They are also responsible for setting internal control policies and monitoring the effectiveness of the internal control systems. They ensure proper books of accounts are kept and accounting policies are in conformity with: International Financial Reporting Standards; Prudential Guidelines for licensed Banks; Circulars issued by the Central Bank of Nigeria; The requirements of the Banks and Other Financial Institutions Act; and The requirements of the Companies and Allied Matters Act. Risk Assessment

The Board and Senior Management regularly assess the risks the Bank is exposed to, including risks relating to financial reporting. Management Committees meets on a regular basis to assess the credit, market, interest rates, liquidity, legal and reputational risks facing the bank. Senior Management also


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regularly considers whether the existing internal controls are effective in relation to the risks identified in the financial reporting process.

The Board also assesses the effectiveness of the bank's internal control over financial reporting on an ongoing basis and specifically at mid-year and year end. The Management letter issued by the external auditors which contains the auditors’ observations on the control environment in the bank is discussed at the Audit Committee meetings. Control Activities

Control activities are an integral part of the Bank’s day to day operations. Senior Management has set up control structure to ensure control activities are defined at every business area.

Examples of the Bank’s control activities include the following; Top Management Reviews

Internal Audit Reports eliciting control weaknesses are presented periodically to management and Board Audit Committee.

Preparation of financial statements on a daily basis for management review. Monthly and quarterly profitability review, where the bank’s financial performance is reviewed

and compared with the set budgets. Quarterly reports of the Chief Risk Officer to the Board, eliciting the existing and potential risks facing the Bank and the mitigants deployed.

Activity Control Control functions are embedded within each business area for self checking of activities within the areas (for instance, transactions call over for timely detection of errors is carried out by all posting units).

Physical Controls

There are policies guiding access to the Bank’s physical and financial assets, including dual custody, use of overrides etc.

Compliance with Limits

The Bank sets internal limits guiding its trading book activities, liquidity and interest rate gaps, credit concentration limits. The limits are monitored on a daily basis by an independent unit outside the business areas.

Approval and Authorisation Limits

There are segregation of duties; no officer can start and conclude transactions Limits exist for credit and expense approvals. Transactions are approved at appropriate levels.

Verifications and Reconciliations

All internal ledgers are regularly proofed and reconciled; exception reports are generated.


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Information and Communication/ Monitoring

The Bank’s management understands the need for a timely, reliable and accurate information flow within the Bank, for effective decision making and enhanced financial reporting. Every activity of the Bank is codified in the Bank’s standard operating procedure (SOP), which outlines the process flow and specifies the duties and responsibilities of every officer in relation to the activity. The SOP further highlights requirement for reporting, the frequency of reporting as well as those within the organization to whom the report would be directed to.

The following are some of the generic internal reports used by management for decision making and monitoring purposes:

FINSTAT- Financial Statements Report BPR- Business Performance Review Report MPR- Monthly Profitability Report Liquidity Ratio Report OPR - Operations Performance Report APR- Account Profitability Report ECR- Expense Control Report CAC- Criticized Asset Committee Report CLR- Criticized Loans Report ALCO- Asset and Liability Committee Report Overdraft Efficiency Report


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Directors’ Report For the half year ended June 30, 2013 The Directors have pleasure in presenting their report on the affairs of Guaranty Trust Bank Plc (“the Bank”) and its subsidiaries (“the Group”), together with the Group audited financial statements and the auditor’s report for the half year ended June 30, 2013. Legal form and principal activity

The Bank was incorporated as a private limited liability company on July 20, 1990. It obtained a license to operate as a commercial bank on August 1, 1990, and commenced business on February 11, 1991. It became a public limited company on April 2, 1996, and its shares were listed on the Nigerian Stock Exchange on September 9, 1996. The Bank was issued a universal banking license by the Central Bank of Nigeria on February 5, 2001.

The Bank’s principal activity continues to be the provision of commercial banking services to its customers. Such services include retail banking, granting of loans and advances, equipment leasing, corporate finance, money market activities and related services, as well as foreign exchange operations.

Following the directive issued by the CBN via the circular dated September 7, 2010, the Bank in 2011 divested its shareholding interests in 3 of its 4 non-banking subsidiaries, namely Guaranty Trust Assurance Plc, which is engaged in the provision of insurance services, GTB Asset Management Limited, an asset management and securities trading company, GTB Registrars Limited which acts as registrars to public companies. It concluded its divestment from the 4th non-banking subsidiary with the sale of GT Homes Limited, a licensed Primary Mortgage Institution which is engaged in mortgage activities in 2012. In accordance with the directives of the CBN, the Bank obtained the approval of the CBN for a Commercial Banking License with International Scope. The Bank has seven overseas subsidiaries namely Guaranty Trust Bank (Gambia) Limited, Guaranty Trust Bank (Sierra Leone) Limited, Guaranty Trust Bank (Ghana) Limited, Guaranty Trust Bank (UK) Limited, Guaranty Trust Bank (Liberia) Limited, Guaranty Trust Bank (Ivory Coast) Limited and GTB Finance B.V. Netherlands, the special purpose entity used to raise its $350 million and $500 million Eurobond Guarantee Notes. The financial results of all the subsidiaries have been consolidated in these financial statements. Operating results The Group’s Gross earnings and Profit before tax increased by 9.4% and 7.0% respectively. Highlights of the Group’s operating results for the period are as follows:


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Group Group Bank Bank June-13 June-12 June-13 June-12 N'000 N'000 N'000 N'000

GROSS EARNINGS 124,202,363

113,526,502

115,161,105

106,122,423

Profit before taxation 57,364,487

53,636,084

54,438,811

52,847,826

Taxation (8,349,626)

(8,693,445)

(7,326,577)

(8,141,325)

Profit for the period from continuing operations

49,014,861

44,942,639

47,112,234

44,706,501

Profit for the period from discontinued operations

-

609,077

-

-

Profit for the period 49,014,861

45,551,716

47,112,234

44,706,501

Non-controlling interest (195,821)

(163,199)

-

-

Profit attributable to equity holders of the Bank 48,819,040

45,388,517

47,112,234

44,706,501

Earnings per share (Naira) - Basic

1.7

1.6

1.6

1.5

Earnings per share (Naira) - Diluted

1.7

1.6

1.6

1.5

Dividends

During the period under review, the Directors paid final dividend in the sum of N1.30 Kobo per ordinary share on the issued capital of 29,431,179,224 Ordinary Shares of 50 Kobo each for the financial year ended December 2012. Withholding tax was deducted at the time of the payment of this dividend. There was no income tax consequence on the Bank as a result of the dividend pay-out, as the bank is only required to deduct at source this tax on behalf of Tax authorities in Nigeria. The tax so withheld represents advance payment of income tax by the recipient shareholders. Directors and their interest

The Directors who held office during the period, together with their direct and indirect interests in the issued share capital (including the Global Depositary Receipts (GDRs)) of the Company as recorded in the register of Directors shareholding and/or as notified by the Directors for the purposes of sections 275 and 276 of the Companies and Allied Matters Act and the listing requirements of the Nigerian Stock Exchange is noted below:


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Names Direct

Holding June 13

*Indirect Holding June 13

Direct Holding June 12

*Indirect Holding June 12

Shares of 50k each Shares of 50k each 1 Mr. Egbert Imomoh 1,102,972 6,243,128 1,102,972 6,243,128 2 Mr. Olusegun Agbaje 32,146,651 9,481,350 32,146,651 9,481,350 3 Mrs. Cathy Echeozo 2,505,118 2,940,300 2,505,118 2,940,300 4 Mr. Andrew Alli 1,163,975 0 1,163,975 0 5 Mr. Akindele Akintoye 363,800 0 363,800 0 6 Mrs. Stella Okoli 3,344,032 0 3,344,032 0 7 Mr. Adebayo Adeola 4,869,492 0 4,869,492 0 8 Mr. Ibrahim Hassan 1,130,838 0 1,130,838 0 9 Mr. Olabode Agusto 0 0 0 0 10 Mrs. Olutola Omotola 452,531 234,350 452,531 234,350 11 Mr. Demola Odeyemi 7,661,601 745,650 7,661,601 745,650 12 Mr. Wale Oyedeji 492,787 0 492,787 0

13 Mr. Ohis Ohiwerei 2,000,000 0 2,000,000 0

14 Mr. Oluwole Oduyemi** 764,385 607,150 1,114,385 5,370,150

15 Mrs. O. A. Demuren*** *Indirect includes indirect shareholding and/or GDR (Global Depository Receipts)

** Retired from the Board on April 17, 2013

***Appointed as a Non-Executive Director on April 17, 2013

There has been no significant change to Directors’ shareholdings within the period under review.

Directors’ Remuneration The remuneration of the bank’s directors is disclosed pursuant to section 34(5) of the Code of Corporate Governance for public companies as issued by Securities and Exchange Commission as follows:

Type of package Description Timing Fixed

Basic Salary

- Part of gross salary package for Executive Directors only.

- Reflects the banking industry competitive salary package and the extent to which the bank’s objectives have been met for the financial year

Paid monthly during the financial year

13th month salary

- Part of gross salary package for Executive Directors only.

- Reflects the banking industry competitive salary package and the extent to which the bank’s objectives

Paid last month of the financial year


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have been met for the financial year

Director fees - Paid annually on the day of the AGM to Non-Executive Directors only

Paid once on the day of the AGM

Sitting allowances - Allowances paid to Non-Executive Directors only for sitting at board meetings and Board Committee meetings.

Paid during the year

Changes on the Board During the period under review, the erstwhile Chairman of the Board, Mr. O. S. Oduyemi, retired from the Board of Directors at the end of the Annual General Meeting held on April 25, 2013, in compliance with the provisions of the Code of Corporate Governance of the Bank which stipulates that Non-Executive Directors shall retire from the Board upon attaining the age of seventy (70) years. Subsequent upon the retirement of the erstwhile Chairman, the Board of Directors appointed Mr. E.U. Imomoh as the Chairman of the Board, in line with the well defined succession plan of the Company. The Board also appointed Mrs. Osaretin Afusat Demuren as a Non-Executive Director to fill the vacancy created by the retirement of Mr. Oduyemi. Her appointment has been approved by the Central Bank of Nigeria. Mrs. Demuren holds a Masters Degree in Economics and Statistics from the Moscow Institute of Economics and Statistics, Moscow, and a Diploma in Russian Language and Preliminary Studies from the Kiev State University, Kiev. She had a successful career with the Central Bank of Nigeria which spanned over 33 years, during which she served as Director, Trade and Exchange Department and was deployed to serve as the Director, Human Resource Department in 2004, a position which she held until her retirement from the Central Bank of Nigeria in December, 2009. She is a member of many professional associations including the Society for Human Resource Management of America, Nigerian Statistical Association, and Chartered Institute of Personnel Management of Nigeria and the Chartered Institute of Bankers of Nigeria. The appointment of Mrs. Demuren will be presented for shareholders’ approval at the next Annual General Meeting of the Bank.

Directors’ interest in Contracts For the purpose of Section 277 of the Companies and Allied Matters Act, 2004, Messrs. Adeola and Agusto disclosed to the Board their interest as directors of Comprehensive Project Management Services Limited (a project management company) and Agusto & Company Limited (a credit rating company) respectively, which provided services to the Bank in the course of the period under review. The selection and conduct of the companies are in conformity with rules of ethics and acceptable standards. In addition, the Bank ensures that all such contracts are conducted at arm’s length at all times.


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Retirement by Rotation In accordance with Article 84 of the Bank’s Articles of Association, Messrs. Imomoh and Oduyemi retired by rotation at the Annual General Meeting of the Bank held on April 25, 2013. Mr. Imomoh, being eligible, offered himself for re-election and was re-elected as a Director of the Bank. However, Mr. Oduyemi retired at the end of the Annual General Meeting, in compliance with the provisions of the Code of Corporate Governance of the Bank which stipulates that Non-Executive Directors shall retire from the Board upon attaining the age of seventy (70) years.

Shareholding analysis The analysis of the distribution of the shares of the Bank as at half year ended June 30, 2013, is as follows:

Share Range Number Of Shareholders

% of Shareholder

Number Of Holdings

% Shareholding

1 - 10,000 253,300 73.07 817,417,276 2.78 10,001 - 50,000 68,785 19.84 1,499,382,338 5.09 50,001 - 100,000 11,446 3.30 804,792,287 2.73

100,001 - 500,000 10,333 2.98 2,113,190,855 7.18 500,001 - 1,000,000 1,250 0.36 872,446,899 2.96

1,000,001 - 5,000,000 1,187 0.34 2,388,572,135 8.12 5,000,001 - 10,000,000 148 0.04 997,839,291 3.39

10,000,001 - 50,000,000 137 0.04 2,963,295,822 10.07 50,000,001 - 100,000,000 29 0.01 2,052,044,318 6.97

100,000,001 - 500,000,000 19 0.01 4,729,039,328 16.07 500,000,001 - 1,000,000,000 1 0.00 811,659,602 2.76

1,000,000,01 - 2,000,000,000 3 0.00 3,840,290,531 13.05 2,000,000,01 - 5,000,000,000 1 0.00 2,007,759,255 6.82

Sub-Total 346,639 99.9997 25,897,729,937 87.9942 GDR [underlying shares] 1 0.0003 3,533,449,287 12.0058 TOTAL 346,640 100.0000 29,431,179,224 100.0000 According to the Register of members as at June 30, 2013, no individual shareholder held more than 5% of the issued share capital of the Bank except for the following:

Shareholder No. of Percentage of Shares held Shareholding

GDR (underlying shares)* 3,533,449,287 12.01

Stanbic Nominees Nigeria Limited** 6,018,442,511 20.46

* Citibank Nigeria Limited held the 3,533,449,287 units of shares in its capacity as custodian for the underlying shares of the Global Depositary Receipts (GDRs) issued by the Bank in July 2007, and listed on the London Stock Exchange. Citibank does not exercise any rights over the underlying shares as beneficial owner. All the rights reside with the various GDR holders who have the right to convert their GDRs to ordinary shares. ** Stanbic Nominees Nigeria Limited held 20.46% of the Bank’s shares largely in trading accounts on behalf of various investors.


31

Donations and charitable gifts

In order to identify with the aspirations of various sections of the society, the Group donated a total sum of N216,451,948 (Jun. 2012: N162,918,067) as donations and charitable contributions during the period. This represents a growth of 33% over the donations given in the same period for 2012 and it comprises contributions to Educational organizations, Art and Cultural organizations, and Professional organizations amongst others. The distribution of these donations is show below:

A listing of the beneficiary organizations and the amounts donated to them is shown below: Sector Organisation Total Arts GTBank Nollywood Study Centre 328,000.00 House Of Tara 500,000.00 Media Development 200,000.00 MUSON 75,000.00 Tate Partnership 24,481,124.65 Terra Kulture 3,000,000.00 Yinka Shonibare'S 2013 Art Exhibition 6,350,000.00 Community Development African Gifted Foundation Academy 1,905,000.00 Anwar Ul Islam 500,000.00 Aret Adams Foundation 250,000.00 Chike Okoli Foundation 1,200,000.00 Children’s Day 450,000.00 Dept Of Pediatrics UNTH, Enugu 500,000.00 Fate Foundation 1,000,000.00 Heritage Cup 22,532,857.25 Honey Bee Foundation 300,000.00

16%

77%

2% 0% 4%

Arts Community Development Education Environment Others


32

Int'l Women Organisation For Charity 20,000.00 Kids Start Right 50,000.00 Lagos Polo Club 10,000,000.00 Lebanese Ladies Society 130,000.00 Lindy's Gem Foundation 500,000.00 Nig Stock Exchange 271,267.75 Nigeria Finance And Investment Summit 300,000.00 Nigeria Police Force 5,250,000.00 Nigeria Police Games 5,000,000.00 Oil Council 3,371,550.00 Orange Ribbon Initiative - Autism 29,316,635.50 Pass Now Now 9,999,998.68 Polo Tournament 10,806,750.00 Principals Cup - Lagos, Ogun & Rivers State 43,390,042.85 Rotary Club 2,000,000.00 Shekere Magazine 500,000.00 Special Olympics Nigeria 2,615,500.94 Special Persons Association 50,000.00 Swiss Red Cross 15,203,302.00 Yoruba Council Of Youth 150,000.00 Education Adopt-A-School 90,400.00 Dowen College 20,000.00 Durham University 269,500.00 Gem's Preparatory School 273,800.00 Ikoyi Nursery 250,000.00 King'S College 68,250.00 Methodist Boys High School 75,000.00 Olashore Int'L School 422,000.00 Pacelli School For The Blind 165,550.00 St. Gregory’s College 1,755,600.00 St. Saviour’s School 1,500,000.00 UNAAB Int Schools 200,000.00 Usman Dan Fodio University 150,000.00 Environment Environment Maintenance-Daoula Round about

Kano 83,160.00

Lagos State Govt Environmental Protection Agency 250,000.00 Roundabout 92,170.00 Others Others 8,289,488.81 216,451,948.43

Post balance sheet events There were no post balance sheet events which could have a material effect on the financial position of the Group as at 30 June, 2013 and profit attributable to equity holders on that date other than as disclosed in the


33

financial statements.

Research and development The Bank is on a continuous basis, carrying out research into new banking products and services.

Gender Analysis

The number and percentage of women employed during the financial year vis-a-vis total workforce is as follows:

Male Female Total Male Female Number %

Employees 1,713 1,309 3,022 57% 43% Gender analysis of Board and Top Management is as follows:


Board 10 4 14 75% 25% Top Management (AGM - GM) 38 17 55 70% 30% Total 48 21 69 Detailed Gender analysis of Board and Top Management is as follows:


Assistant General Manager 16 6 22 75% 25% Deputy General Manager 15 4 19 79% 21% General Manager 7 7 14 50% 50% Executive Director & Deputy Managing Director 3 2 5 60% 40% Managing Director 1 0 1 100% 0% Non-Executive Directors 7 2 8 81% 19% Total 49 20 69 Human Resources Policy (1) Employment of disabled persons

The Bank operates a non-discriminatory policy in the consideration of applications for employment, including those received from disabled persons. The Bank’s policy is that the most qualified and experienced persons are recruited for appropriate job levels, irrespective of an applicant’s state of origin, ethnicity, religion or physical condition.

In the event of any employee becoming disabled in the course of employment, the Bank is in a position to arrange appropriate training to ensure the continuous employment of such a person without subjecting him/her to any disadvantage in his/her career development. Currently, the Bank has five persons on its staff list


34

with physical disability. (2) Health, Safety and Welfare of Employees The Bank maintains business premises designed with a view to guaranteeing the safety and healthy living conditions of its employees and customers alike. Employees are adequately insured against occupational and other hazards. In addition, the Bank provides medical facilities to its employees and their immediate families at its expense. Fire prevention and fire-fighting equipment are installed in strategic locations within the Bank’s premises. The Bank operates a Group Personal Account Accident and the Workmen’s Compensation Insurance covers for the benefits of its employees. It also operates a contributory pension plan in line with the Pension Reform Act 2004 as well as a terminal gratuity scheme for its employees. (3) Employee Involvement and Training The Bank encourages participation of employees in arriving at decisions in respect of matters affecting their well being. Towards this end, the Bank provides opportunities where employees deliberate on issues affecting the Bank and employee interests, with a view to making inputs to decisions thereon. The Bank places a high premium on the development of its manpower. Consequently, the Bank sponsored its employees for various training courses, both locally and overseas, in the period under review. BY ORDER OF THE BOARD

Olutola Omotola Company Secretary Plot 635, Akin Adesola Street, Victoria Island, Lagos 17 July, 2013


35

Statement of Directors’ Responsibilities in Relation to the Financial Statements for the period ended June 30, 2013 The Directors accept responsibility for the preparation of the full year financial statements set out on pages 40 to 249 that give a true and fair view in accordance with IAS 34 on Interim Financial Statements and in the manner required by the Companies and Allied Matters Act 1990 of Nigeria, the Banks and Other Financial Institutions Act of Nigeria and relevant Central Bank of Nigeria regulations. The Directors further accept responsibility for maintaining adequate accounting records as required by the Companies and Allied Matters Act of Nigeria and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error. Going Concern: The Directors have made assessment of the Company’s ability to continue as a going concern and have no reason to believe that the Bank will not remain a going concern in the year ahead. Resulting from the above, the directors have a reasonable expectation that the company has adequate resources to continue operations for the foreseeable future. Thus, directors continued the adoption of the going concern basis of accounting in preparing the annual financial statements. SIGNED ON BEHALF OF THE DIRECTORS BY:

CATHY ECHEOZO SEGUN AGBAJE 17 July, 2013 17 July, 2013


36

Report of the Audit Committee For the period ended 30 June, 2013

To the members of Guaranty Trust Bank Plc

In accordance with the provisions of Section 359 (6) of the Companies and Allied Matters Act 1990, the members of the Audit Committee of Guaranty Trust Bank Plc hereby report as follows:

♦ We have exercised our statutory functions under Section 359 (6) of the Companies and Allied Matters Act, 1990 and acknowledge the co-operation of management and staff in the conduct of these responsibilities.

♦ We are of the opinion that the accounting and reporting policies of the Bank and Group are in accordance with legal requirements and agreed ethical practices and that the scope and planning of both the external and internal audits for the period ended 30 June, 2013 were satisfactory and reinforce the Group’s internal control systems.

♦ We are satisfied that the Bank has complied with the provisions of Central Bank of Nigeria circular BSD/1/2004 dated 18 February, 2004 on “Disclosure of directors' related credits in the financial statements of banks”, and hereby confirm that an aggregate amount of N5,764,297,435 (31 December, 2012: N6,336,282,000) was outstanding as at 30 June, 2013. The status of performance of insider related credits is as disclosed in Note 47(d).

♦ We have deliberated with the External Auditors, who have confirmed that necessary cooperation was received from management in the course of their statutory audit and we are satisfied with management’s responses to the External Auditor’s recommendations on accounting and internal control matters and with the effectiveness of the Bank’s system of accounting and internal control.

Mr. Akinola B. Akinsami Chairman, Audit Committee 17 July, 2013 Members of the Audit Committee are: 1. Mr. Akinola B. Akinsami - Chairman 2. Alhaji M.A. Usman 3. Mrs. Sandra Mbagwu-Fagbemi 4. Mr. Bode Agusto 5. Ibrahim Hassan 6. Andrew Alli In attendance: Mr. Segun Fadahunsi - Secretary


Financial statements

39


Statements of financial positionAs at 30 June 2013

Group Group Parent Parent

In thousands of Nigerian Naira Jun-2013 Dec-2012 Jun-2013 Dec-2012

Assets

Cash and cash equivalents 4, 8, 23 232,414,899 322,989,480 180,356,202 256,433,560

Loans and advances to banks 4, 8, 24 4,143,418 4,864,824 32,498 177,985

Loans and advances to customers 4, 8, 25 894,862,976 779,050,018 848,309,592 742,436,944

Financial assets held for trading 4, 8, 26 31,066,348 271,073,896 27,358,077 267,417,182

Investment securities:

– Available for sale 4, 8, 27 296,801,242 15,765,789 288,873,847 10,138,761

– Held to maturity 4, 8, 27 120,598,110 129,490,810 101,692,526 118,897,917

Assets pledged as collateral 4, 8, 28 27,529,108 31,203,230 27,529,108 31,203,230

Investment in subsidiaries 29 - - 22,998,802 22,925,088

Property and equipment 30 63,737,475 60,886,728 58,069,741 55,496,808

Intangible assets 31 2,403,549 1,772,176 2,052,665 1,539,717

Deferred tax assets 32 863,887 991,791 - -

Other assets 33 186,073,392 116,789,118 179,283,124 113,650,031

Total assets 1,860,494,404 1,734,877,860 1,736,556,182 1,620,317,223

Liabilities

Deposits from banks 4, 8, 35 17,657,973 23,860,259 1,430,966 7,170,321

Deposits from customers 4, 8, 36 1,254,445,308 1,148,197,165 1,158,421,656 1,054,122,573

Other liabilities 8, 38 89,462,161 80,972,096 77,054,502 69,872,456

Current income tax liabilities 21 11,963,123 15,630,973 11,732,712 15,340,116

Deferred tax liabilities 32 5,817,448 3,288,196 5,670,120 3,225,418

Debt securities issued 4, 8, 37 94,007,480 86,926,227 13,228,726 13,238,291

Other borrowed funds 4, 8, 40 90,191,530 92,561,824 169,879,450 169,194,418

Total liabilities 1,563,545,023 1,451,436,740 1,437,418,132 1,332,163,593

Notes

40


Statements of financial position (Continued)

As at 30 June 2013



Equity 41

Capital and reserves attributable to equity

holders of the parent entity

Share capital 14,715,590 14,715,590 14,715,590 14,715,590

Share premium 123,471,114 123,471,114 123,471,114 123,471,114

Treasury shares (2,046,714) (2,046,714) - -

Retained earnings 34,403,282 41,380,776 41,132,507 47,558,325

Other components of equity 125,159,807 104,651,663 119,818,839 102,408,601

Total equity attributable to owners of the Parent 295,703,079 282,172,429 299,138,050 288,153,630

Non-controlling interests in equity 1,246,302 1,268,691 - -

Total equity 296,949,381 283,441,120 299,138,050 288,153,630

Total equity and liabilities 1,860,494,404 1,734,877,860 1,736,556,182 1,620,317,223

Approved by the Board of Directors on 17 July 2013 and signed on its behalf by:

Director/Chief Financial Officer

Demola Odeyemi

The accompanying notes are an integral part of these financial statements

Notes

Director

Cathy Echeozo

Director

Segun Agbaje

41


Income statementsFor the period ended 30 June 2013


In thousands of Nigerian Naira Notes Jun-2013 Jun-2012 Jun-2013 Jun-2012

Interest income 9 92,000,395 83,176,926 86,280,338 79,179,733

Interest expense 10 (23,460,611) (18,785,450) (21,799,503) (17,677,481)

Net interest income 68,539,784 64,391,476 64,480,835 61,502,252

Loan impairment charges 11 (1,317,532) (2,410,863) (1,107,877) (1,707,356)

Net interest income after loan impairment charges 67,222,252 61,980,613 63,372,958 59,794,896

Fee and commission income 12 25,048,165 24,809,180 21,615,202 22,012,856

Fee and commission expense 13 (490,823) (783,073) (452,538) (747,079)

Net fee and commission income 24,557,342 24,026,107 21,162,664 21,265,777

Net gains/(losses) on financial instruments classified as

held for trading 14 3,517,125 2,981,141 2,711,183 2,069,859

Other income 15 3,636,678 2,559,255 4,554,382 2,859,975

Personnel expenses 17 (10,976,285) (10,400,084) (9,705,384) (8,213,674)

General and administrative expenses 18 (11,832,237) (11,097,511) (10,724,159) (10,299,338)

Operating lease expenses (410,118) (638,698) (306,534) (383,482)

Depreciation and amortization 19 (4,902,531) (4,187,943) (4,458,684) (3,767,274)

Other operating expenses 20 (13,447,739) (11,586,796) (12,167,615) (10,478,913)

Profit before income tax 57,364,487 53,636,084 54,438,811 52,847,826

Income tax expense 21 (8,349,626) (8,693,445) (7,326,577) (8,141,325)

Profit for the period from continuing operations 49,014,861 44,942,639 47,112,234 44,706,501

Profit for the period from discontinued operations 34 - 609,077 - -

Profit for the period 49,014,861 45,551,716 47,112,234 44,706,501

42


Income statements (Continued)

For the period ended 30 June 2013



Profit attributable to:

Equity holders of the parent entity (total) 48,819,040 45,388,517 47,112,234 44,706,501

– Profit for the period from continuing operations 48,819,040 44,828,737 47,112,234 44,706,501

– Profit for the period from discontinued operations 34 - 559,780 - -

Non-controlling interests (total) 195,821 163,199 - -

– Profit for the period from continuing operations 195,821 113,902 - -

– Profit for the period from discontinued operations 34 - 49,297 - -

49,014,861 45,551,716 47,112,234 44,706,501

Earnings per share for the profit from continuing operations

attributable to the equity holders of the parent entity during

the period (expressed in naira per share):

– Basic 22 1.73 1.59 1.60 1.52

– Diluted 22 1.73 1.59 1.60 1.52

Earnings per share for the profit from discontinued operations



– Basic - 0.02 - -

– Diluted - 0.02 - -


43


Statement of comprehensive incomeFor the period ended 30 June 2013




Other comprehensive income:

Other comprehensive income to be reclassified to profit or loss in

subsequent periods:

Foreign currency translation differences for foreign operations 1,163,010 (2,133,947) - -

Income tax relating to Foreign currency translation differences

for foreign operations 21 (348,903) - - -

Net change in fair value of available for sale financial assets 3,049,903 1,218,333 3,046,740 1,220,887

Income tax relating to Net change in fair value of available for

sale financial assets 21 (914,971) (366,266) (914,022) (306,448)

Other comprehensive income for the period, net of tax 2,949,039 (1,281,880) 2,132,718 914,439

Total comprehensive income for the period 51,963,900 44,269,836 49,244,952 45,620,940



– Total comprehensive income for the period from continuing

operations 51,791,182 43,643,070 49,244,952 45,620,940

– Total comprehensive income for the period from

discontinued operations - 559,780 - -



operations 172,718 17,689 - -

– Total comprehensive income for the period from

discontinued operations - 49,297 - -



44


Income statementsFor 3 months ended 30 June 2013 (Unaudited)


In thousands of Nigerian Naira Jun-2013 Jun-2012 Jun-2013 Jun-2012

Interest income 46,730,738 42,483,074 43,951,373 40,643,191

Interest expense (11,633,449) (9,539,737) (10,824,477) (9,032,537)

Net interest income 35,097,289 32,943,338 33,126,896 31,610,654

Loan impairment charges 164,896 (2,005,181) 23,379 (1,518,635)

Net interest income after loan impairment charges 35,262,185 30,938,157 33,150,275 30,092,019

Fee and commission income 11,981,154 13,907,811 9,725,232 12,213,765

Fee and commission expense (203,274) (621,210) (180,589) (600,199)

Net fee and commission income 11,777,880 13,286,601 9,544,643 11,613,566 Net gains/(losses) on financial instruments classified as held for

trading 875,369 2,723,416 534,949 2,350,267

Other income 1,042,927 1,797,607 2,355,160 1,860,595

Personnel expenses (5,517,134) (5,280,483) (5,065,373) (3,819,998)

General and administrative expenses (8,403,438) (8,202,417) (7,587,777) (7,446,732)

Operating lease expenses (257,102) (416,505) (157,354) (244,445)

Depreciation and amortization (2,521,286) (2,067,840) (2,265,694) (1,831,713)

Other operating expenses (3,386,518) (3,526,849) (3,214,623) (3,352,842)

Profit before income tax 28,872,883 29,251,687 27,294,206 29,220,717

Income tax expense (2,414,274) (3,621,069) (1,897,655) (3,415,903)

Profit for the period from continuing operations 26,458,609 25,630,619 25,396,551 25,804,814

Profit for the period from discontinued operations - 517,238 - -


45


Income statements(Continued)





– Profit for the period from continuing operations 26,349,458 25,464,656 25,396,551 25,804,814

– Profit for the period from discontinued operations - 449,400 - -


– Profit for the period from continuing operations 109,151 40,622 - -

– Profit for the period from discontinued operations - 193,179 - -

26,458,609 26,147,856 25,396,551 25,804,814




– Basic 0.93 0.92 0.86 0.88

– Diluted 0.93 0.92 0.86 0.88




– Basic 0.004 0.008 - -

– Diluted 0.004 0.008 - -


46


Statement of comprehensive incomeFor 3 months ended 30 June 2013 (Unaudited)




Other comprehensive income:

Other comprehensive income to be reclassified to profit or loss in

subsequent periods:

Foreign currency translation differences for foreign operations 1,572,853 (1,291,942) 1,163,010 -

Net change in fair value of available for sale financial assets 3,049,903 1,221,394 3,049,903 1,223,948

Income tax relating to component of other comprehensive income (1,263,874) (535,279) (914,022) (307,060)

Other comprehensive income for the period, net of tax 3,358,882 (605,827) 3,298,891 916,888





operations 29,608,490 25,073,855 27,529,269 26,721,701

– Total comprehensive income for the period from discontinued

operations - 490,802 - -

Non-controlling interests (total) (22,009,974) 73,585 (21,715,683) -


operations (22,009,974) 47,150 (21,715,683) -

– Total comprehensive income for the period from discontinued

operations - 26,435 - -



47


Consolidated Statement of Changes in Equity

June 2013

Group

In thousands of Nigerian Naira Share Share Regulatory risk Statutory Treasury Fair value

Foreign currency

translation Retained

Non-

controlling Total

capital premium reserve reserves shares reserve reserve earnings interest equity

Balance at 1 January 2013 14,715,590 123,471,114 11,312,801 95,070,970 (2,046,714) 169,607 (1,901,715) 41,380,776 1,268,691 283,441,120

Total comprehensive income for

the period:

Profit for the period - - - - - - - 48,819,040 195,821 49,014,861

Other comprehensive income,

net of tax

Foreign currency translation

difference - - - - - - 837,210 - (23,103) 814,107

Fair value adjustment - - - - - 2,134,932 - - - 2,134,932

Total other comprehensive

income - - - - - 2,134,932 837,210 - (23,103) 2,949,039

Total comprehensive income - - - - - 2,134,932 837,210 48,819,040 172,718 51,963,900

Transactions with equity holders,

recorded directly in equity:

Transfers for the period - - 2,418,992 15,117,010 - - - (17,536,002) - -

Dividend to equity holders 1 - - - - - - - (38,260,532) (195,107) (38,455,639)

Total transactions with equity

holders - - 2,418,992 15,117,010 - - - (55,796,534) (195,107) (38,455,639)

Balance at 30 June 2013 14,715,590 123,471,114 13,731,793 110,187,980 (2,046,714) 2,304,539 (1,064,505) 34,403,282 1,246,302 296,949,381

1 See Note 42

48


Consolidated Statement of Changes in Equity

Jun-2012

Group

In thousands of Nigerian Naira Share Share

Regulatory

risk Other regulatory Treasury Fair value

Foreign currency

translation Retained Non-controlling Total

capital premium reserve reserves shares reserve reserve earnings interest equity

Balance at 1 January 2012 14,715,590 123,471,114 - 68,088,215 (2,046,714) (854,621) (112,167) 25,130,520 2,001,217 230,393,154

Total comprehensive income for the period:

Profit for the period - - - - - - - 45,388,517 163,199 45,551,716

Other comprehensive income, net of tax

Foreign currency translation difference - - - - - - (2,037,734) - (96,213) (2,133,947)

Fair value adjustment - - - - - 852,067 - - - 852,067

Total other comprehensive income - - - - - 852,067 (2,037,734) - (96,213) (1,281,880)

Total comprehensive income - - - - - 852,067 (2,037,734) 45,388,517 66,986 44,269,836

Transactions with equity holders, recorded

directly in equity:

Transfers for the period - - - 13,928,013 - - - (13,928,013) - -

Dividend to equity holders - - - - - - - (25,016,502) (58,680) (25,075,182)

Non-controlling interest of subsidiaries

disposed - - - - - - - - (1,023,769) (1,023,769)

Total transactions with equity holders - - - 13,928,013 - - - (38,944,515) (1,082,449) (26,098,951)

Balance at 30 June 2012 14,715,590 123,471,114 - 82,016,228 (2,046,714) (2,554) (2,149,901) 31,574,522 985,754 248,564,039

49


Statement of Changes in Equity

June 2013

Parent

In thousands of Nigerian Naira Share Share Regulatory risk Statutory Fair value Retained Total

capital premium reserve reserves reserve earnings equity

Balance at 1 January 2013 14,715,590 123,471,114 11,312,801 90,926,193 169,607 47,558,325 288,153,630


Profit for the period - - - - - 47,112,234 47,112,234


Fair value adjustment - - - - 2,132,718 - 2,132,718

Total other comprehensive income - - - - 2,132,718 - 2,132,718

Total comprehensive income - - - - 2,132,718 47,112,234 49,244,952


directly in equity:

Transfers for the period - - 1,143,850 14,133,670 - (15,277,520) -

Dividend to equity holders 1 - - - - - (38,260,532) (38,260,532)

Total transactions with equity holders - - 1,143,850 14,133,670 - (53,538,052) (38,260,532)

Balance at 30 June 2013 14,715,590 123,471,114 12,456,651 105,059,863 2,302,325 41,132,507 299,138,050

1 See Note 42

50


Statement of Changes in Equity

Jun-2012

Parent

In thousands of Nigerian Naira Share Share

Regulatory

risk

Other

regulatory Fair value Retained Total

capital premium reserve reserves reserve earnings equity

Balance at 1 January 2011 14,715,590 123,471,114 - 65,347,045 (914,439) 31,560,746 234,180,056


Profit for the period - - - - - 44,706,501 44,706,501


Fair value adjustment - - - - 914,439 - 914,439

Total other comprehensive income - - - - 914,439 - 914,439

Total comprehensive income - - - - 914,439 44,706,501 45,620,940


directly in equity:

Transfers for the period - - - 13,411,950 - (13,411,950) -

Dividend to equity holders - - - - - (25,016,502) (25,016,502)

Total transactions with equity holders - - - 13,411,950 - (38,428,452) (25,016,502)

Balance at 30 June 2011 14,715,590 123,471,114 - 78,758,995 - 37,838,795 254,784,494

51


Statements of cash flowsFor the period ended 30 June 2013

-



Cash flows from operating activities


Adjustments for:

Depreciation of property and equipment 19, 30 4,521,128 4,035,846 4,163,486 3,572,006

Amortisation of Intangibles 381,403 152,097 295,198 195,268

Gain on disposal of property and equipment (53,902) (44,948) (39,552) (33,515)

Gain from disposal of subsidiaries - (411,040) - -

Impairment on financial assets 1,368,508 2,410,863 1,158,854 1,707,356

Net interest income (68,539,784) (64,391,476) (64,480,835) (61,502,252)

Foreign exchange gains 15 (3,568,303) (1,601,011) (3,562,977) (1,493,645)

Dividend received (168,226) (126,356) (1,105,606) (644,828)

Income tax expense 21, 34 8,349,626 8,693,445 7,326,577 8,141,325

Other non-cash items 1,277,732 2,533,099 1,277,732 2,533,099

(7,416,957) (3,197,765) (7,854,889) (2,818,685)

Changes in:

Financial assets held for trading 239,918,654 26,064,177 240,059,105 12,693,946

Assets pledged as collateral 3,674,122 8,577,547 3,674,122 8,577,547

Loans and advances to banks 567,723 (2,258,747) 145,719 (77,367)

Loans and advances to customers (114,205,643) (89,410,165) (107,031,734) (86,081,318)

Other assets (69,586,155) (12,658,870) (65,998,323) (12,835,492)

Deposits from banks (5,310,411) (24,038,254) (5,739,355) (20,484,316)

Deposits from customers 107,122,586 38,244,130 104,299,083 23,542,122

Other liabilities 8,696,069 20,555,565 7,458,023 15,888,983

170,876,945 (34,924,617) 176,866,640 (58,775,895)

Interest received 93,059,051 77,189,202 87,338,994 73,192,009

Interest paid (25,806,563) (15,330,826) (24,145,456) (14,222,856)

230,712,476 23,735,994 232,205,289 (2,625,427)

Income tax paid1(10,318,568) (8,414,748) (9,403,302) (7,899,050)

220,393,908 15,321,246 222,801,987 (10,524,477) Net cash/(used in) provided by operating activities

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Statements of cash flowsFor the period ended 30 June 2013



Cash flows from investing activities

Sale/(purchase) of investment securities (269,139,381) (6,835,428) (258,482,955) 9,893,678

Dividends received 168,226 126,356 1,105,606 644,828

Purchase of property and equipment130 (7,249,689) (8,553,904) (6,439,638) (6,626,852)

Proceeds from the sale of property and equipment 325,167 976,071 108,000 871,451

Purchase of intangible assets131 (1,009,534) (512,597) (808,146) (492,574)

Investment in subsidiaries - - (73,714) (3,485,058)

Purchase of investment properties - (31,983) - -

Proceeds from disposal of investment properties - 268,284 - -

Cash inflow on disposal of subsidiaries 34 3,775,711 3,500,000 - 3,500,000

Cash outflow on disposal of subsidiaries 34 (3,775,711) (3,775,711) - -

Net cash provided by/(used in) investing activities (276,905,211) (14,838,912) (264,590,847) 4,305,473

Cash flows from financing activities

Increase in debt securities issued 3,928,949 - - -

Repayment of debt securities issued - (57,389,414) - (4,589)

Repayment of long term borrowings - (6,928,183) 2,922,175 (63,461,876)

Increase in long term borrowings (2,310,615) 9,061,993 (2,237,143) 9,061,993

Finance lease repayments (275,977) (257,803) (275,977) (257,803)

Dividends paid to owners 42 (38,260,532) (25,016,502) (38,260,532) (25,016,502)

Dividends paid to non-controlling interest (195,107) (58,680) - -

Net cash provided by financing activities (37,113,282) (80,588,589) (37,851,477) (79,678,777)

Net (decrease) /increase in cash and cash equivalents (93,624,585) (80,106,255) (79,640,337) (85,897,781)

Cash and cash equivalents at beginning of period 322,989,479 369,105,220 256,433,560 330,294,424

Effect of exchange rate fluctuations on cash held 3,050,005 388,659 3,562,979 1,493,645

Cash and cash equivalents at end of the period 232,414,899 289,387,624 180,356,202 245,890,288


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Notes to the financial statements Guaranty Trust Bank and Subsidiary Companies

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1. Reporting entity

Guaranty Trust Bank Plc (“the Bank” or “the Parent”) is a company domiciled in Nigeria. The address of the Bank’s registered office is Plot 635, Akin Adesola Street, Victoria Island, Lagos. These separate and consolidated financial statements, for the period ended 30 June 2013, are prepared for the Parent and the Group (Bank and its subsidiaries, separately referred to as “Group entities”) respectively. The Parent and the Group are primarily involved in investment, corporate and retail banking.

2. Basis of preparation

The interim financial statements of the Parent and the Group have been prepared in accordance with IAS 34 ‘Interim financial reporting’ and with the requirements of the Companies and Allied Matters Act and the Banks and Other Financial Institutions Act.

These financial statements were authorised for issue by the directors on 17 July, 2013.

3(a) Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements. All entities within the group apply the same accounting policies.

(a) Functional and presentation currency

These financial statements are presented in Nigerian Naira, which is the Bank’s functional currency. Except where indicated, financial information presented in Naira has been rounded to the nearest thousand.

(b) Interim Financial Statements

The accompanying Statements of Financial Positions as at 30th June, 2013, the Statements of Comprehensive Income for the six months ended 30 June 2013, and 2012, the Statements of Changes in Equity for the six months ended 30th June, 2013 and 2012, the Statements of Cash Flows for the six months ended 30th June, 2013 and 2012 and the explanatory notes to the financial statements are audited and have been prepared for interim financial information. These Interim Financial Statements are complete (as described in IAS 1) and have been prepared in compliance with the International Financial Reporting Standards. The unaudited Statements of Comprehensive income for the three months ended 30 June 2013 and 2012 have also been prepared for second quarter interim financial information.

(c) Functional and presentation currency These financial statements are presented in Nigerian Naira, which is the Bank’s functional currency. Except where indicated, financial information presented in Naira has been rounded to the nearest thousand.


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(d) Basis of measurement These financial statements have been prepared on the historical cost basis except for the following:

Derivative financial instruments are measured at fair value. Non-derivative financial instruments, carried at fair value through profit or loss, are measured

at fair value. Available-for-sale financial assets are measured at fair value. However, when the fair value

of the Available-for-sale financial assets cannot be measured reliably, they are measured at cost less impairment.

Liabilities for cash-settled share-based payment arrangements are measured at fair value. The liability for defined benefit obligations is recognized as the present value of the

defined benefit obligation less the total of the plan assets. The plan assets for defined benefit obligations are measured at fair value. Assets and liabilities held for trading are measured at fair value

(e) Use of Estimates and Judgements The preparation of the financial statements in conformity with IFRS requires the directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. Information about significant areas of estimation uncertainties and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in note 6.

(f) Changes to accounting policies

New and amended standards and interpretations The accounting policies adopted are consistent with those of the previous financial period. o Standards and interpretations effective during the reporting period Amendments to the following standard(s) which became effective in the reporting period did not have any material impact on the accounting policies, financial position or performance of the Group:

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income: These

introduce a grouping of items presented in other comprehensive income (OCI). Items that could be reclassified (or recycled) to profit or loss at a future point in time (e.g., net gain on hedge of net investment, exchange differences on translation of foreign operations, net movement on cash flow hedges and net loss or gain on available-for-sale financial assets)


56

now have to be presented separately from items that will never be reclassified (e.g., actuarial gains and losses on defined benefit plans and revaluation of land and buildings). The amendment affected presentation only and had no impact on the Group’s financial position or performance. The amendments also clarify the requirement for comparative information i.e. the difference between voluntary additional comparative information and the minimum required comparative information. An entity must include comparative information in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period. The additional voluntarily comparative information does not need to be presented in a complete set of financial statements. The Group does not voluntarily provide additional comparative information.

Amendment to IAS 19: The standard became effective 1 January, 2013. The amendment introduces changes to recognition of deficit / surplus on defined benefit plans and presentation of defined benefit cost. It also introduces net interest on net defined benefit assets (liability) and more extensive disclosures. The effect of changes to recognition of deficit / surplus on defined benefit plans is the immediate recognition of actuarial gains and losses (now “remeasurements”) in Other Comprehensive Income as against the previous practice of immediate recognition in the Group’s Profit or Loss. The Group does not expect this to have material impact on its Other Comprehensive Income except there are significant changes in market related assumptions. The concept of net interest on net defined benefit asset (liability) introduced by this amendment is different from the prior practice of separate recognition of interest cost on defined benefit obligation and expected returns on plan assets. This is not expected to have significant impact on the Group because there are no wide margins between interest cost and expected returns on assets. The other changes to termination benefits and 10% corridor do not affect the Group as it neither pays termination benefits nor apply the rule.

Amendments to IAS 34: IAS 34 Interim financial reporting and segment information for total

assets and liabilities (Amendment). The amendment clarifies the requirements in IAS 34 relating to segment information for total assets and liabilities for each reportable segment to enhance consistency with the requirements in IFRS 8 Operating Segments. Total assets and liabilities for a reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change in the total amount disclosed in the entity’s previous annual consolidated financial statements for that reportable segment. The Group already provides this disclosure in prior period because it is part of the segment information reported to the chief operating decision maker (CODM) and the Group as opted to disclose the information regardless of the materiality for the benefit of the users of the financial statement. As such, this amendment does not have a material impact on the Group.

IFRS 10 Consolidated Financial Statements and IAS 27 Separate Financial Statements: IFRS 10 establishes a single control model that applies to all entities including special purpose entities. IFRS 10 replaces the parts of previously existing IAS 27 Consolidated and Separate Financial Statements that dealt with consolidated financial statements and SIC-12 Consolidation – Special Purpose Entities. IFRS 10 changes the definition of control such that an investor controls an investee when it is exposed, or has rights, to variable returns from its


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involvement with the investee and has the ability to affect those returns through its power over the investee. To meet the definition of control in IFRS 10, all three criteria must be met, including: (a) an investor has power over an investee; (b) the investor has exposure, or rights, to variable returns from its involvement with the investee; and (c) the investor has the ability to use its power over the investee to affect the amount of the investor’s returns. IFRS 10 had no impact on the consolidation of investments held by the Group.

Amendments to IFRS 7: The amendment requires an entity to disclose information about rights to set-off financial instruments and related arrangements (e.g., collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity’s financial position. The new disclosures are required for all recognised financial instruments that are set off in accordance with IAS 32. The disclosures also apply to recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether the financial instruments are set off in accordance with IAS 32. As the Group is not setting off financial instruments in accordance with IAS 32 and does not have relevant offsetting arrangements, the amendment does not have an impact on the Group.

Amendment to IAS 32 Tax effects of distributions to holders of equity instruments: The amendment to IAS 32 Financial Instruments: Presentation clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with IAS 12 Income Taxes. The amendment removes existing income tax requirements from IAS 32 and requires entities to apply the requirements in IAS 12 to any income tax arising from distributions to equity holders. The amendment did not have an impact on the consolidated financial statements for the Group, as there is no company income tax consequences attached to cash or non-cash distribution.

IFRS 12 Disclosure of Interests in Other Entities IFRS 12 sets out the requirements for disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. The Standard combines and makes consistent, certain existing disclosures that were previously included in IAs 27 and IAS 28 while introducing certain new disclosure requirements including those relating to unconsolidated structured. The group has duly adopted the standard and has made the disclosures relevant to its interest in subsidiaries in these consolidated financial statements.

IFRS 13 Fair Value Measurement: IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements, when such measurements are required or permitted by other IFRSs. In particular, it unifies the definition of fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date. It also replaces the disclosure requirements about fair value measurements in other IFRSs, including IFRS 7 Financial Instruments: Disclosures, and expands them by requiring that all assets, liabilities and equities, including those that are not financial instruments, be measured at fair value. Furthermore, additional extensive disclosures are required in many areas and the extent of these disclosures increase as the Fair value inputs fall significantly within level 2 and 3 of the fair value hierarchy. In accordance with the transitional provisions of IFRS 13, the Group has applied all the requirements provided by the new fair value measurement guidance prospectively, and has not provided comparative information for new disclosures.


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IFRS 1 First-time Adoption of International Financial Reporting Standards was amended with effect for reporting periods starting on or after 1 January 2013. The Group is not a first-time adopter of IFRS, therefore, this amendment is not relevant to the Group. The Group has not adopted any yet ineffective standard, interpretation or amendment early.

o Standards and interpretations issued but not yet effective

Standard Content Effective Year

IFRIC Interpretation 21 Levies 1-Jan-14 IAS 27 Consolidated and Separate Financial Statement 1-Jan-14 IFRS 12 Disclosure of Interests in Other Entities 1-Jan-14 IFRS 10 Consolidated Financial Statement 1-Jan-14 IFRS 9 Financial Instrument 1-Jan-15

3(b) Other Accounting Policies Other accounting policies that have been applied are:

(a) Consolidation

The financial statements of the subsidiaries used to prepare the consolidated financial statements were prepared as of the parent company’s reporting date. The consolidation principles are unchanged as against prior year.

(i) Subsidiaries

Subsidiaries are entities controlled by the Parent. Control exists if and only if the Parent:

a. Has power over the subsidiary (whether or not that power is used in practice) b. is exposed to or has rights to variable returns from the subsidiary c. has the ability to use its power over the subsidiary to affect the reporting entity’s returns from

that subsidiary

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Parent.

Acquisitions on or after 1 January 2009

For acquisitions on or after 1 January 2009, the Group measures goodwill as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.


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The Group elects on a transaction-by-transaction basis whether to measure at the acquisition date components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation at its fair value, or at its proportionate share of the recognised amount of the identifiable net assets, as at acquisition date. All other components of non-controlling interests are measured at their acquisition-date fair values, unless another measurement basis is required by IFRSs. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Acquisitions between 1 January 2003 and 1 January 2009 For acquisitions between 1 January 2003 and 1 January 2009, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain was recognised immediately in profit or loss. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred in connection with business combinations were capitalised as part of the cost of the acquisition. Acquisitions prior to 1 January 2003 As part of its transition to IFRSs, the Group elected to restate only those business combinations that occurred on or after 1 January 2003. In respect of acquisitions prior to 1 January 2003, goodwill represents the amount recognised under the Group’s previous accounting framework, (Nigerian GAAP).

(ii) Special purpose entities Special purpose entities (SPEs) are entities that are created to accomplish a narrow and well-defined objective such as the securitisation of particular assets, or the execution of a specific borrowing or lending transaction. An SPE is consolidated if it is controlled by the Parent.

The following circumstances may indicate a relationship in which, in substance, the Group controls and consequently consolidates an SPE:

If the group:

a. Has power over the subsidiary (whether or not that power is used in practice) b. is exposed to or has rights to variable returns from the subsidiary c. has the ability to use its power over the subsidiary to affect the reporting entity’s returns from

that subsidiary The Group established GTB Finance B.V., Netherlands as a special purpose entity to issue its $850 million Eurobond Guaranteed Notes. Accordingly, the financial statements of GTB Finance B.V. have been consolidated.

(iii) Accounting method of consolidation

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. The results


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of the subsidiaries acquired or disposed of during the period are included in the consolidated financial statements from the effective acquisition date and or up to the effective date on which control ceases, as appropriate. The integration of the subsidiaries into the consolidated financial statements is based on consistent accounting and valuation methods for similar transactions and other occurrences under similar circumstances.

(iv) Transactions eliminated on consolidation Intra-group balances, and income and expenses (except for foreign currency translation gains or losses) arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Profits and losses resulting from intra-group transactions that are recognized in assets are also eliminated.

(v) Non-controlling interest The group applies IAS 27 Consolidated and Separate Financial Statements (2008) in accounting for acquisitions of non-controlling interests. Under this accounting policy, acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as owners and therefore no goodwill is recognised as a result of such transactions. The adjustments to non-controlling interests are based on the proportionate amount of the net assets of the subsidiary.

(b) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’).

(ii) Transactions and balances

Foreign currency transactions that are transactions denominated, or that require settlement, in a foreign currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.

Monetary items denominated in foreign currency are translated using the closing rate as at the reporting date. Non-monetary items measured at historical cost denominated in a foreign currency are translated with the exchange rate as at the date of initial recognition; non monetary items in a foreign currency that are measured at fair value are translated using the exchange rates at the date when the fair value was determined. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income statement, except when deferred in equity as gains or losses from qualifying cash flow hedging instruments or qualifying net investment hedging instruments. All foreign exchange gains and losses recognised in the Income statement are presented net in the Income statement within the corresponding item. Foreign exchange gains and losses on other comprehensive income items are presented in other comprehensive income within the corresponding item.


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In the case of changes in the fair value of monetary assets denominated in foreign currency classified as available for sale, a distinction is made between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in the carrying amount, except impairment, are recognised in equity.

(iii) Group Entities

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: Assets and liabilities for each statement of financial position presented are translated at the closing

rate at the date of that statement of financial position; Income and expenses for each Income statement are translated at average exchange rates (unless this

average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions);

All resulting exchange differences are recognised in other comprehensive income.

Exchange differences arising from the above process are reported in shareholders’ equity as ‘Foreign currency translation reserve’.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to ‘Other comprehensive income’. When a foreign operation is disposed of, or partially disposed of, such exchange differences are recognised in the consolidated income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

(c) Interest

Interest income and expense for all interest bearing financial instruments are recognised in the income statement within “interest income” and “interest expense” using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability (or, where appropriate, the next re-pricing date) to the carrying amount of the financial asset or liability. When calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of the financial instruments but not future credit losses. The calculation of the effective interest rate includes contractual fees and points paid or received transaction costs, and discounts or premiums that are an integral part of the effective interest rate. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or liability.


62

Interest income and expense presented in the Income statement include: Interest on financial assets and liabilities measured at amortised cost calculated on an effective interest

rate basis.

Interest on financial assets measured at fair value through profit or loss calculated on an effective interest rate basis.

(d) Fees and commission

Fees and Commission that are integral to the effective interest rate on a financial asset are included in the measurement of the effective interest rate. Fees, such as processing and management fees charged for assessing the financial position of the borrower, evaluating and reviewing guarantee, collateral and other security, negotiation of instruments’ terms, preparing and processing documentation and finalising the transaction are an integral part of the effective interest rate on a financial asset or liability and are included in the measurement of the effective interest rate of financial assets or liabilities. Other fees and commissions which relates mainly to transaction and service fees, including loan account structuring and service fees, investment management and other fiduciary activity fees, sales commission, placement line fees, syndication fees and guarantee issuance fees are recognised as the related services are provided / performed.

(e) Net trading income

Net trading income comprises gains less losses related to trading assets and liabilities, and it includes all realised and unrealised fair value changes, dividends and foreign exchange differences.

(f) Net income from other financial instruments at fair value through profit or loss

Net income from other financial instruments at fair value through profit or loss relates to derivatives held for risk management purposes that do not form part of qualifying hedge relationships. Fair value changes on other derivatives held for risk management purposes, and other financial assets and liabilities carried at fair value through profit or loss, are presented in Other operating income – Mark to market gain/(loss) on trading investments in the Income statement.

(g) Dividend income Dividend income is recognised when the right to receive income is established. Dividends on trading equities are reflected as a component of net trading income. Dividend income on long term equity investments is recognised as a component of other operating income.

(h) Leases Leases are accounted for in accordance with IAS 17 and IFRIC 4. They are divided into finance leases and operating leases.


63

(a) The Group is the lessee (i) Operating lease Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the income statements on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

(ii) Finance lease Leases, where the Group has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other liabilities. The interest element of the finance cost is charged to the Income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The investment properties acquired under finance leases are measured subsequently at their fair value.

(b) The Group is the lessor

When assets are held subject to a finance lease, the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method (before tax), which reflects a constant periodic rate of return.

(i) Income Tax

(a) Current income tax Income tax payable is calculated on the basis of the applicable tax law in the respective jurisdiction and is recognised as an expense for the period except to the extent that current tax related to items that are charged or credited in other comprehensive income or directly to equity. In these circumstances, deferred tax is charged or credit to other comprehensive income or to equity (for example, current tax on available-for-sale investment). Where the Group has tax losses that can be relieved only by carry-forward against taxable profits of future periods, a deductible temporary difference arises. Those losses carried forward are set off against deferred tax liabilities carried in the consolidated statement of financial position. The Group evaluates positions stated in tax returns; ensuring information disclosed are in agreement with the underlying tax liability, which has been adequately provided for in the financial statements.

(b) Deferred income tax Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.


64

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

However, the deferred income tax is not recognised for: • temporary differences on the initial recognition of assets or liabilities in a transaction that is not a

business combination and that affects neither accounting nor taxable profit or loss; • temporary differences related to investments in subsidiaries where the timing of the reversal of the

temporary difference is controlled by the Group and it is probable that they will not reverse in the foreseeable future; and

• Temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognised when it is probable that future taxable profit will be available against which these temporary differences can be utilised. The tax effects of carry-forwards of unused losses or unused tax credits are recognised as an asset when it is probable that future taxable profits will be available against which these losses can be utilised. Deferred tax related to fair value re-measurement of available-for-sale investments and cash flow hedges, which are recognised in other comprehensive income, is also recognised in the other comprehensive income and subsequently in the income statement together with the deferred gain or loss. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities against current tax assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

(j) Financial assets and liabilities

(i) Recognition

The Group initially recognises loans and advances, deposits, debt securities issued and subordinated liabilities on the date that they are originated. All other financial assets and liabilities (including assets and liabilities designated at fair value through profit or loss) are initially recognised on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

(ii) Classification

The classification of financial instruments depends on the purpose and management’s intention for which the financial instruments were acquired and their characteristics. The Group’s classification of Financial Assets and Liabilities are in accordance with IAS 39, viz: (a) Loans and Receivables

The group’s loans and receivable comprises loans and advances, cash and cash equivalent and other receivables. Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and that the Group does not intend to sell immediately or in the near


65

term. When the Group is the lessor in a lease agreement that transfers substantially all of the risks and rewards incidental to ownership of an asset to the lessee, the arrangement is classified as a finance lease and a receivable equal to the net investment in the lease is recognised and presented within loans and advances.

When the Group purchases a financial asset and simultaneously enters into an agreement to resell the asset (or a substantially similar asset) at a fixed price on a future date (“reverse repo or stock borrowing”), the arrangement is accounted for as a loan or advance, and the underlying asset is not recognised in the Group’s financial statements.

Cash and cash equivalents include notes and coins on hand, unrestricted balances held with central banks and highly liquid financial assets with original maturities of less than three months, which are subject to insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments. Cash and cash equivalents are carried at amortised cost in the Statements of financial position.

a) Available-for-sale investments

Available-for-sale investments are non-derivative investments that are not designated as another category of financial assets. Unquoted equity securities whose fair value cannot be reliably measured are carried at cost. All other available-for-sale investments are carried at fair value (see note J(iii)).

Interest income is recognised in profit or loss using the effective interest method. Dividend income is recognised in profit or loss when the Group becomes entitled to the dividend. Foreign exchange gains or losses on available-for-sale debt security investments are recognised in profit or loss.

Other fair value changes are recognised directly in other comprehensive income until the investment is sold or impaired whereupon the cumulative gains and losses previously recognised in other comprehensive income are recognised to profit or loss as a reclassification adjustment.

A non-derivative financial asset may be reclassified from the available-for-sale category to the loans and receivable category if it otherwise would have met the definition of loans and receivables and if the Group has the intention and ability to hold that financial asset for the foreseeable future or until maturity.

b) Held-to-maturity

Held-to-maturity investments are non-derivative assets with fixed or determinable payments and fixed maturity that the Group has the positive intent and ability to hold to maturity, and which are not designated at fair value through profit or loss or available-for-sale.

Held-to-maturity investments are carried at amortised cost using the effective interest method. A sale or reclassification of a significant amount of held-to-maturity investments would result in the reclassification of all held-to-maturity investments as available-for-sale, and prevent the Group from classifying


66

investment securities as held-to-maturity for the current and the following two financial years. However, sales and reclassifications in any of the following circumstances would not trigger a reclassification:

●Sales or reclassifications that are so close to maturity that changes in the market rate of interest would not have a significant effect on the financial asset’s fair value.

●Sales or reclassifications after the Group have collected substantially all the asset’s original Principal.

●Sales or reclassification attributable to non-recurring isolated events beyond the Group’s control that could not have been reasonably anticipated.

d) Financial assets and liabilities at fair value through profit or loss This category comprises two sub-categories: financial assets classified as held for trading, and financial assets designated by the Group as at fair value through profit or loss upon initial recognition.

Financial liabilities for which the fair value option is applied are recognised in the Statements of financial position as ‘Financial liabilities designated at fair value’. Fair value changes relating to financial liabilities designated at fair value through profit or loss are recognised in ‘Net gains on financial instruments designated at fair value through profit or loss’.

-Financial assets and liabilities classified as held for trading

Trading assets and liabilities are those assets and liabilities that the Group acquires or incurs principally for the purpose of selling or repurchasing in the near term, or holds as part of a portfolio that is managed together for short-term profit.

Trading assets and liabilities are initially recognised and subsequently measured at fair value in the statement of financial position with transaction costs recognised in profit or loss. All changes in fair value are recognised as part of net trading income in profit or loss.

- Designation at fair value through profit or loss The Group designates certain financial assets upon initial recognition as at fair value through profit or loss (fair value option). This designation cannot subsequently be changed. According to IAS 39, the fair value option is only applied when the following conditions are met:

• the application of the fair value option reduces or eliminates an accounting mismatch that would

otherwise arise or • the financial assets are part of a portfolio of financial instruments which is risk managed and

reported to senior management on a fair value basis or • the financial assets consists of debt host and an embedded derivative that must be separated.

To reduce accounting mismatch, the fair value option is applied to certain loans and receivables that are hedged with credit derivatives or interest rate swaps but for which the hedge accounting conditions of IAS 39 are not fulfilled. The loans would have been otherwise accounted for at amortised cost, whereas the derivatives are measured at fair value through profit or loss.

The fair value option is also applied to investment funds that are part of a portfolio managed on a fair value


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basis. Furthermore, the fair value option is applied to structured instruments that include embedded derivatives.

Financial assets for which the fair value option is applied are recognised in the Statements of financial position as ‘Financial assets designated at fair value’. Fair value changes relating to financial assets designated at fair value through profit or loss are recognised in ‘Net gains on financial instruments designated at fair value through profit or loss’.

(iii) Measurement

All financial instruments are measured initially at their fair value plus transaction costs, except in the case of financial assets and financial liabilities recorded at fair value through profit or loss where transaction cost are expensed in the income statement. Financial assets at fair value through profit and loss are subsequently measured at fair value. Held to maturity financial assets and Loans and receivables are subsequently measured at amortised cost using the effective interest rate. Available for sale financial assets are subsequently measured at fair value through equity or profit and loss except where the fair value cannot be reliably measured. See (note o (i-iv)). Non-trade financial liabilities are measured at amortised cost. Liabilities held for trading are measured at fair value. Subsequent recognition of financial assets and liabilities is at amortised cost or value. Changes in the fair value of monetary and non monetary securities classified as available-for-sale are recognised in their comprehensive income (OCI). When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognized in equity are included in the income statements as “gains or losses from investment securities”.

a) Amortised cost measurement The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment.

b) Fair value measurement Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction on the measurement date.

For financial instruments traded in active markets, the determination of fair values of financial assets and financial liabilities is based on quoted market prices or dealer price quotations. This includes listed equity securities and quoted debt instruments on major exchanges (for example, NSE, LSE) and broker quotes from Bloomberg and Reuters.

A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If the above criteria are not met, the market is regarded as being inactive. Indications that a market is inactive are when there is a wide bid-offer spread or significant increase in the bid-offer spread or there are few recent


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transactions.

For all other financial instruments, fair value is determined using valuation techniques. In these techniques, fair values are estimated from observable data in respect of similar financial instruments, using models to estimate the present value of expected future cash flows or other valuation techniques, using inputs (for example, NIBOR, LIBOR yield curve, FX rates, volatilities and counterparty spreads) existing at the end of the reporting period. The Group uses widely recognised valuation models for determining fair values of non-standardised financial instruments of lower complexity, such as options or interest rate and currency swaps. For these financial instruments, inputs into models are generally market-observable. For more complex instruments, the Group uses internally developed models, which are usually based on valuation methods and techniques generally recognised as standard within the industry. Valuation models are used primarily to value derivatives transacted in the over-the-counter market, unlisted debt securities (including those with embedded derivatives) and other debt instruments for which markets were or have become illiquid. Some of the inputs to these models may not be market observable and are therefore estimated based on assumptions. In cases when the fair value of unlisted equity instruments cannot be determined reliably, the instruments are carried at cost less impairment. For the purpose of disclosure, the fair value for loans and advances as well as liabilities to banks and customers are determined using a present value model on the basis of contractually agreed cash flows, taking into account credit quality, liquidity and costs.

(iv) Offsetting

Financial assets and liabilities are set off and the net amount presented in the statements of financial position when, and only when, the Group has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under IFRSs, or for gains and losses arising from a group of similar transactions such as in the Group’s trading activity.

(v) De-recognition

On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset transferred), and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss. The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all the risks and rewards of ownership and it does not retain control of the financial asset. Any interest in such transferred financial asset that qualify for derecognition that is created or retained by the Group is recognized as a separate asset or liability.


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In certain transactions the Group retains the obligations to service the transferred financial asset for a fee. The transferred asset is derecognized if it meets the derecognition criteria. An asset or liability is recognized for the servicing contract, depending on whether the servicing fee is more than adequate (asset) or is less than adequate (liability) for performing the servicing.

The Group enters into transactions whereby it transfers assets recognized on its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets or a portion of them. If all or substantially all risks and rewards are retained, then the transferred assets are not derecognized. Transfers of assets with retention of all or substantially all risks and rewards include, for example, securities lending and repurchase transactions.

When assets are sold to a third party with a concurrent total rate of return swap on the transferred assets, the transaction is accounted for as a secured financing transaction similar to repurchase transactions as the Group retains all or substantially all the risks and rewards of ownership of such assets.

In transactions in which the Group neither retains nor transfers substantially all the risks and rewards of ownership of a financial asset and it retains control over the asset, the Group continues to recognize the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset.

The Group derecognizes a financial liability other than financial guarantees and loan commitments as measured at amortized cost or fair value through profit and loss

(vi) Pledge of assets as collateral

Financial assets transferred to external parties that do not qualify for de-recognition (see J(iii)) are reclassified in the statement of financial position from financial assets held for trading or investment securities to assets pledged as collateral, if the transferee has received the right to sell or re-pledge them in the event of default from agreed terms. Initial recognition of assets pledged as collateral is at fair value, whilst subsequent measurement is based on the classification of the financial asset. Assets pledged as collateral are either designated as held for trading, available for sale or held to maturity. Where the assets pledged as collateral are designated as held for trading, subsequent measurement is at fair value through profit and loss, whilst assets pledged as collateral designated as available for sale are measured at fair-value through equity. Assets pledged as collateral designated as held to maturity are measured at amortized cost.

(vii) Sale and repurchase agreements Securities sold under repurchase agreements (‘repos’) remain on the statements of financial position; the counterparty liability is included in amounts due to other banks, deposits from banks, other deposits or deposits due to customers, as appropriate. Securities purchased under agreements to resell (reverse repos’) are recorded as money market placement. The difference between sale and repurchase price is treated as interest and accrued over the life of the agreements using the effective interest method. Securities lent to counterparties are also retained in the financial statements. Securities borrowed are not recognised in the financial statements, unless these are sold to third parties, in which case the purchase


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and sale are recorded with the gain or loss included in trading income.

(viii) Identification and measurement of impairment

(A) Assets carried at amortised cost The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

(a) significant financial difficulty of the issuer or obligor; (b) a breach of contract, such as a default or delinquency in interest or principal payments; (c) the lender, for economic or legal reasons relating to the borrower’s financial difficulty, granting

to the borrower a concession that the lender would not otherwise consider;

(d) it becomes probable that the borrower will enter bankruptcy or other financial re-organisation; (e) the disappearance of an active market for that financial asset because of financial difficulties; or (f) observable data indicating that there is a measurable decrease in the estimated future cash

flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including:

(i) adverse changes in the payment status of borrowers in the portfolio; and (ii) national economic conditions that correlate with defaults on the assets in the portfolio.

The estimated period between a loss occurring and its identification is determined by local management for each identified portfolio. In general, the periods used vary between three months and 12 months; in exceptional cases, longer periods are warranted. The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. The amount of the loss is measured as the difference between the asset’s carrying amount and the present


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value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the Income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price. The calculation of the present value of the estimated future cash flows of a collateralized financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable. For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics (that is, on the basis of the Group’s grading process that considers asset type, industry, geographical location, collateral type, past-due status and other relevant factors). Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being evaluated. Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the Group and historical loss experience for assets with credit risk characteristics similar to those in the Group. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not currently exist. Estimates of changes in future cash flows for groups of assets should reflect and be directionally consistent with changes in related observable data from period to period (for example, changes in unemployment rates, property prices, payment status, or other factors indicative of changes in the probability of losses in the Group and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group to reduce any differences between loss estimates and actual loss experience. When a loan is uncollectible, it is written off against the related allowance for loan impairment. Such loans are written off after all the necessary procedures have been completed and the amount of the loss has been determined. Impairment charges relating to loans and advances to banks and customers are classified in loan impairment charges whilst impairment charges relating to investment securities (held to maturity category) are classified in ‘Net gains/ (losses) on investment securities’. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the Income statement.


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(B) Assets classified as available for sale The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is objective evidence of impairment resulting in the recognition of an impairment loss. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the Income statement. Impairment losses recognised in the Income statement on equity instruments are not reversed through the Income statement. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the Income statement. Assets classified as available for sale are assessed for impairment in the same manner as assets carried at amortised cost.

(k) Investment securities

Investment securities are initially measured at fair value plus, in case of investment securities not at fair value through profit or loss, incremental direct transaction costs and subsequently accounted for depending on their classification as either held for trading, held-to-maturity, fair value through profit or loss or available-for-sale. See description in accounting policy Note J (ii) above

(l) Derivatives held for risk management purposes Derivatives held for risk management purposes include all derivative assets and liabilities that are not classified as trading assets or liabilities. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value with changes in fair value recognised in profit or loss.

(m) Investment in subsidiaries Investments in subsidiaries are reported at cost less any impairment (if any).

(n) Property and equipment

(i) Recognition and measurement The bank recognizes items of property, plant and equipment at the time the cost is incurred. These costs include costs incurred initially to acquire or construct an item of property, plant and equipment. Its cost also includes the costs of its dismantlement, removal or restoration, the obligation for which an entity incurs as a consequence of using the item during a particular period. Items of property and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. When parts of an item of property or equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment. The assets’ carrying values and useful lives are reviewed, and written down if appropriate, at each date of the Statements of financial position. Assets are impaired whenever events or changes in circumstances indicate that the carrying amount is less than the recoverable amount; see note (s) on impairment of non-financial


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assets. (ii) Subsequent costs

The cost of replacing part of an item of property or equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to- day servicing of property and equipment are recognised in the income statement as incurred.

(iii) Depreciation Depreciation is recognised in the income statement on a straight-line basis to write down the cost of each asset, to their residual values over the estimated useful lives of each part of an item of property and equipment. Leased assets under finance lease are depreciated over the shorter of the lease term and their useful lives. Depreciation begins when an asset is available for use and ceases at the earlier of the date that the asset is derecognised or classified as held for sale in accordance with IFRS 5. A non-current asset or disposal group is not depreciated while it is classified as held for sale. The estimated useful lives for the current and comparative periods are as follows:

Item of Property, Plant and Equipment Estimated Useful Life Leasehold improvements Over the shorter of the useful life of the item

or lease term Buildings 50years Land Over the remaining life of the lease Furniture and equipment 5years Computer hardware 3years Motor vehicles 4years Other transportation equipment 10years

Capital work in progress is not depreciated. Upon completion it is transferred to the relevant asset category. Depreciation methods, useful lives and residual values are reassessed at each reporting date.

Cost of land is amortised over the remaining life of the lease as stated in the certificate of occupancy issued by Government.

(iv) De-recognition

An item of property and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.

(o) Intangible assets

(i) Goodwill Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value


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of the identifiable assets, liabilities and contingent liabilities of the acquired subsidiaries at the date of acquisition. When the excess is negative, it is recognised immediately in profit or loss; Goodwill on acquisition of subsidiaries is included in intangible assets.

Subsequent measurement Goodwill is allocated to cash-generating units or groups of cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose identified in accordance with IFRS 8. Goodwill is tested annually as well as whenever a trigger event has been observed for impairment by comparing the present value of the expected future cash flows from a cash generating unit with the carrying value of its net assets, including attributable goodwill and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(ii) Software

Software acquired by the Group is stated at cost less accumulated amortisation and accumulated impairment losses. Expenditure on internally developed software is recognised as an asset when the Group is able to demonstrate its intention and ability to complete the development and use the software in a manner that will generate future economic benefits, and can reliably measure the costs to complete the development. Development costs previously expensed cannot be capitalised. The capitalised costs of internally developed software include all costs directly attributable to developing the software and capitalised borrowing costs, and are amortised over its useful life. Internally developed software is stated at capitalised cost less accumulated amortisation and impairment. There was no such expenditure during the year. Subsequent expenditure on software assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful life of the software, from the date that it is available for use since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The maximum useful life of software is five years. Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(p) Impairment of non-financial assets

The carrying amounts of the Group’s non-financial assets, inclusive of deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives or that are available for use, the recoverable amount is estimated each year. However, the Group chooses the cost model measurement to reassess investment property after initial recognition i.e. depreciated cost less any accumulated impairment losses. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its


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recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(q) Deposits, debt securities issued

Deposits and debt securities issued are the Group’s sources of debt funding. When the Group sells a financial asset and simultaneously enters into a “repo” or “stock lending” agreement to repurchase the asset (or a similar asset) at a fixed price on a future date, the arrangement is accounted for as a deposit, and the underlying asset continues to be recognised in the Group’s financial statements. The Group classifies capital instruments as financial liabilities or equity instruments in accordance with the substance of the contractual terms of the instruments. Deposits and debt securities issued are initially measured at fair value plus transaction costs, and subsequently measured at their amortised cost using the effective interest method, except where the Group chooses to carry the liabilities at fair value through profit or loss.

(r) Provisions

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. The Group recognizes no provision for future operating losses. A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is


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measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.

(s) Financial guarantees

Financial guarantees are contracts that require the Group to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantee liabilities are initially recognised at their fair value, and the initial fair value is amortised over the life of the financial guarantee. The guarantee liability is subsequently carried at the higher of this amortised amount and the present value of any expected payment (when a payment under the guarantee has become probable). Financial guarantees, principally consisting of letters of credit are included within other liabilities.

(t) Employee benefits

(i) Defined contribution plans A defined contribution plan is a pension plan under which the Group pays fixed contributions to a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. For defined contribution plans, the Group pays contributions to publicly or privately administered pension fund administrators (PFA) on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense in the Statements of Comprehensive Income when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. (ii) Defined benefit plans A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors, such as age, years of service and compensation. The liability recognised in the Statements of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the date of the Statements of financial position less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. Remeasurements arising from experience adjustments and changes in actuarial assumptions in excess of the plan assets or of the defined benefit obligation are charged or credited to Other Comprehensive Income in the financial year in which they arise. Past-service costs are recognised immediately in the Income statement, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis


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over the vesting period.

(iii)Termination benefits Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date. Termination benefits for voluntary redundancies are recognised if the Group has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting date, then they are discounted to their present value.

(iv)Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(v)Share-based payment transactions The Bank operates a cash-settled share based compensation plan (i.e. share appreciation rights - SARs) for its management personnel. The management personnel are entitled to the share appreciation rights at a pre-determined price after spending five years in the Bank. The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognized as an expense, with a corresponding increase in liabilities, over the period in which the employees become unconditionally entitled to payment. The liability is re-measured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognized as personnel expense in profit or loss.

(u) Discontinued operations The Group presents discontinued operations in a separate line in the Income statement if an entity or a component of an entity has been disposed of or is classified as held for sale and:

(a) Represents a separate major line of business or geographical area of operations; (b) Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of

operations; or (c) Is a subsidiary acquired exclusively with a view to resale Net profit from discontinued operations includes the net total of operating profit and loss before tax from operations, including net gain or loss on sale before tax or measurement to fair value less costs to sell and discontinued operations tax expense. A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Group´s


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operations and cash flows. If an entity or a component of an entity is classified as a discontinued operation, the Group restates prior periods in the Income statement. Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition, subject to terms that are usual and customary for sales of such assets.

(v) Share capital and reserves

(i) Share issue costs Incremental costs directly attributable to the issue of an equity instrument are deducted from the initial measurement of the equity instrument.

(ii) Dividend on the Bank’s ordinary shares

Dividends on the Bank’s ordinary shares are recognised in equity when approved by the Bank’s shareholders.

(iii)Treasury shares

Where the Bank or any member of the Group purchases the Bank’s shares, the consideration paid is deducted from shareholders’ equity as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders’ equity.

(w) Earnings per share

The Group presents basic Earnings Per Share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the period.

(x) Segment reporting

An operating segment is a component of the Group that engages in business activities from which it can earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components, whose operating results are reviewed regularly by the Executive Management Committee to make decisions about resources allocated to each segment and assess its performance, and for which discrete financial information is available. All costs that are directly traceable to the operating segments are allocated to the segment concerned, while indirect cost are allocated based on the benefits derived from such costs. Total Assets and Liabilities for the reportable segments are also disclosed


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4. Financial risk management (a) Introduction and overview Guaranty Trust Bank has a robust and functional Enterprise-wide Risk Management (ERM) Framework that is responsible for identifying and managing the whole universe of inherent and residual risks facing the Bank. The Group has exposure to the following risks from its use of financial instruments:

• Credit risk • Liquidity risk • Market risks

Other key risks faced by the bank as a result of its existence and operations include operational risks, settlement risks, reputational and strategy risks. This note presents information about the Group’s exposure to each of the risks stated above, the Group’s policies and processes for measuring and managing risks, and the Group’s management of capital. Risk management philosophy The risk management philosophy of the Guaranty Trust Bank Plc Group is drawn from its mission and vision statements and seeks to achieve maximum optimization of the risk – return trade off, while ensuring strong commitment to the following key indices:

• Excellent service delivery across business segments • Sound performance reporting (financial and non-financial) • Sound corporate governance • Consistent appreciation in shareholders’ value.

Guaranty Trust Bank will continue to adhere to the following risk principles to perform consistently on the above stated indices:

• The Bank will not take any action that will compromise its integrity. Sound performance reporting (financial and non-financial)

• The Bank will adhere to the risk management practice of identifying, measuring, controlling and reporting risks.

• Risk control will not constitute an impediment to the achievement of the Bank's Strategic objectives. • The Bank will always comply with all government regulations and embrace global best practices. • The Bank will only assume risks that fall within its risk appetite with commensurate returns.

Risk management framework The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set


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appropriate risk limits and controls, to monitor risks and adherence to limits. This policy is subject to review at least once a year. More frequent reviews may be conducted in the opinion of the Board, when changes in laws, market conditions or the Group’s activities are material enough to impact on the continued adoption of existing policies. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment, in which all employees understand their roles and obligations. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework via its committees – The Board Risk Committee, Board Credit Committee, and Board Audit Committee. These committees are responsible for developing and monitoring risk policies in their specified areas and report regularly to the Board of Directors on their activities. All Board committees have both executive and non-executive members. The Board Committees are assisted by the various Management Committees in identifying and assessing risks arising from day to day activities of the Group. These committees are:

• The Management Credit Committee • Criticized Assets Committee • Asset and Liability Management Committee (ALMAC) • Management Risk Committee • IT Steering Committee • Other Ad-hoc Committees

These committees meet on a regular basis while others are set up on an ad-hoc basis as dictated by the circumstances. The Group’s Audit Committee is responsible for monitoring compliance with the risk management policies and procedures, and for reviewing the adequacy of the risk management framework in relation to risks faced by the Group. The Audit Committee is assisted by the Internal Audit department, in carrying out these functions. Internal Audit undertakes both regular and ad-hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. The Risk Management Organogram of the Group is as follows:


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The Risk Committees at the board and management levels are responsible for reviewing and recommending risk management policies, procedures and profiles including risk philosophy, risk appetite and risk tolerance of the Group. The oversight functions cut across all risk areas. The committee monitors the Bank’s plans and progress towards meeting regulatory Risk-Based Supervision requirements and migration to Basel II compliance as well as the overall Regulatory and Economic Capital Adequacy. The Group’s Board of Directors has delegated responsibility for the management of credit risk to the Board Credit Committee. The Board Credit Committee considers and approves all lending exposures, including treasury investment exposures, as well as insider-related credits in excess of limits assigned to the Management Credit Committee by the Board. Management Credit Committee formulates credit policies in consultation with business units, covering credit assessment, risk grading and reporting, collateral, regulatory and statutory requirements. The committee also assesses and approves all credit exposures in excess of the Managing Director’s limit as approved by the Board.


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The Asset & Liability Management Committee establishes the Group’s standards and policies covering the various components of Market Risk. These include issues on Interest Rate Risk, Liquidity Risk, Investment Risk and Trading Risk. It ensures that the authority delegated by the Board and Management Risk Committees with regard to Market Risk is exercised, and that Market Risk exposures are monitored and managed. Furthermore, the Committee limits and monitors the potential impact of specific pre-defined market movements on the comprehensive income of the Bank through stress tests and simulations. The Credit Risk Management Group is responsible for identifying, controlling, monitoring and reporting credit risk related issues. The Group also serves as the secretariat for the Management Credit Committee. Credit risk is the most critical risk for the Group as credit exposures, arising from lending activities account for the major portion of the Group’s assets and source of its revenue. Thus, the Group ensures that credit risk related exposures are properly monitored, managed and controlled. The Credit Risk Management Group is responsible for managing the credit exposures, which arise as a result of the lending and investment activities as well other unfunded credit exposures that have default probabilities; such as contingent liabilities. Risk management methodology The Group recognizes that it is in the business of managing risks to derive optimal satisfaction for all stakeholders. It has therefore, over the years detailed its approach to risk management through various policies and procedures, which include the following:

• ERM Policy • Credit Policy Guide • Human Resources Policy Manual • Quality Manual • Standard Operating Procedures • IT Policy

To ensure adherence to the policies and procedures, several exception reports on customers and activities of the Group are generated by the various audit control units for management’s decision making. These include:

• Monthly Management Profitability Reports (MPR) for the marketing teams • Monthly Operations Performance Reports (OPR) for the support teams • Quarterly Business Profitability Review • Annual Bank-wide performance appraisal systems • Monthly Expense Control Monitoring Report • Criticized Asset Committee Report

Risk management overview The Group operates a functional Enterprise-wide Risk Management (ERM) Division that manages all aspects of risk including threats and opportunities. The risk management infrastructure therefore encompasses a comprehensive and integrated approach to identifying, managing and reporting:


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(i) the 3 main inherent risk groups –Credit, Market and Operational; (ii) additional core risks such as Reputation and Strategy risks

In addition to this, in compliance with the Central Bank of Nigeria’s ‘Risk-based Supervision’ guidelines, and also to align with Basel II Capital Accord / best global practices, we are in the process of incorporating a strategic framework for efficient measurement and management of the bank’s risks and capital. We have commenced the implementation of Basel II recommended capital measurement approaches for the estimate of the bank’s economic capital required to cope with unexpected losses. We are also putting in place other qualitative and quantitative measures that will assist with enhancing risk management processes and creating a platform for more risk-adjusted decision-making. (b) Credit risk Lending and other financial activities form the core business of the Group. The Group recognises this and has laid great emphasis on effective management of its exposure to credit risk. The Group defines credit risk as the risk of counterparty’s failure to meet the terms of any lending contracts with the Group or otherwise to perform as agreed. Credit risk arises anytime the Group’s funds are extended, committed, invested or otherwise exposed through actual or implied contractual agreements. The Group’s specific credit risk objectives, as contained in the Credit Risk Management Framework, are:

• Maintenance of an efficient loan portfolio • Institutionalization of sound credit culture in the Bank • Adoption of international best practices in credit risk management • Development of Credit Risk Management professionals.

Each business unit is required to implement credit policies and procedures in line with the credit approval authorities granted by the Board. Each business unit is responsible for the quality and performance of its credit portfolio and for monitoring and controlling all credit risks in its portfolio, including those subject to Management Credit Committee’s approval. The Internal Audit and Credit Administration units respectively undertake regular audits of business units and credit quality reviews. The Group continues to focus attention on intrinsic and concentration risks inherent in its business in order to manage its portfolio risk. It sets portfolio concentration limits that are measured under the following parameters: concentration limits per obligor, business lines, industry, sector, rating grade and geographical area. Sector limits reflect the risk appetite of the Group. The Group drives the credit risk management processes using appropriate technology to achieve global best practices. For Credit Risk Capital Adequacy computation under Basel ll Pillar l, the Group has commenced with the use of the Standardized Approach for Credit Risk Measurement, while collating relevant data required for migration to the Internal Rating Based (Foundation) Approach.


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For risk management purposes, credit risk arising on trading securities is managed independently, but reported as a component of market risk exposure. Management of credit risk The Board of Directors has delegated responsibility for the management of credit risk to its Board Credit Committee. A separate Management Credit Committee reporting to the Board Credit Committee is responsible for oversight of the Group’s credit risk, including:

• Formulating credit policies in consultation with business units, covering collateral requirements,

credit assessment, risk grading and reporting, documentary and legal procedures, and compliance with regulatory and statutory requirements.

• Establishing the authorisation structure for the approval and renewal of credit facilities.

Authorisation limits are allocated to business unit heads. Larger facilities require approval by the Management Credit Committee, Deputy Managing Director, Managing Director and the Board Credit Committee/Board of Directors as appropriate.

• Reviewing and assessing credit risk. Management Credit Committee assesses all credit exposures

in excess of designated limits, prior to facilities being committed to customers by the business unit concerned. Renewals and reviews of facilities are subject to the same review process.

• Developing and maintaining the Group’s risk grading in order to categorise exposures according to

the degree of risk of financial loss faced and to focus management on the attendant risks. The current risk grading framework consists of ten grades reflecting varying degrees of risk of default and the availability of collateral or other credit risk mitigation. The responsibility for approving the risk grades lies with the Board Credit Committee. The risk grades are subject to regular reviews by the Risk Management Group.

• Reviewing compliance of business units with agreed exposure limits, including those for

selected industries, country risk and product types. Regular reports are provided to Risk Management Group on the credit quality of local portfolios and appropriate corrective action is taken.

• Providing advice, guidance and specialist skills to business units to promote best practice throughout

the Group in the management of credit risk.

There were no changes in the Group’s risk management policies. Each business unit is required to implement Group credit policies and procedures, with credit approval authorised by the Board Credit Committee. Credit risk measurement In line with IAS 39, the bank adopted incurred loss approach and intends to migrate to the expected loss approach outlined under IFRS 9. The incurred loss approach takes into consideration the emergence period (EP) to arrive at losses that have been incurred at the reporting date. To enable the bank migrate to the internal rating based


85

(foundation approach) as well as the expected loss approach as outlined under IFRS 9, the bank has developed its internal rating models. Guaranty Trust Bank Group undertakes lending activities after careful analysis of the borrowers’ character, capacity to repay, cash flow, credit history, industry and other factors. The Group acknowledges that there are diverse intrinsic risks inherent in its different business segments and, as a result, applies different parameters to adequately dimension the risks in each business segment. The Bank’s rating grades reflect the range of parameters developed to predict the default probabilities of each rating class in line with international best practices and in compliance with BASEL II requirements. The grades reflect granularities and are handled by Account Officers and Relationship Managers with further check by Credit Risk Analysis Unit in Credit Risk Management Group.

Rating Grade Description Characteristics

1 (AAA) Exceptional Credit

• Exceptional credit quality • Obligors with overwhelming capacity to meet obligation • Top multinationals / corporations • Good track record • Strong brand name • Strong equity and assets • Strong cash flows • Full cash coverage

2 (AA) Superior Credit

• Very high credit quality • Exceptionally high cash flow coverage (historical and projected) • Very strong balance sheets with high liquid assets • Excellent asset quality • Access to global capital markets • Typically large national corporate in stable industries and with

significant market share

3 (A) Minimal Risk

• High quality borrowers • Good asset quality and liquidity position • Strong debt repayment capacity and coverage • Very good management • Though credit fundamentals are strong, it may suffer some

temporary setback if any of them are adversely affected • Typically in stable industries

4 (BBB) Above Average

• Good asset quality and liquidity • Very good debt capacity but smaller margins of debt service coverage • Good management in key areas • Temporary difficulties can be overcome to meet debt obligations • Good management but depth may be an issue • Good character of owner • Typically good companies in cyclical industries


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5 (BB) Average

• Satisfactory asset quality and liquidity • Good debt capacity but smaller margins of debt service coverage • Reasonable management in key areas • Temporary difficulties can be overcome to meet debt obligations • Good management but depth may be an issue • Satisfactory character of owner • Typically good companies in cyclical industries

6 (B) Acceptable Risk

• Limited debt capacity and modest debt service coverage • Could be currently performing but susceptible to poor industry

conditions and operational difficulties • Declining collateral quality • Management and owners are good or passable • Typically borrowers in declining markets or with small market share

and operating in cyclical industries

7 (CCC) Watch-list

• Eliciting signs of deterioration as a result of well defined weaknesses that may impair repayment

• Typically start- ups / declining markets/deteriorating industries with high industry risk

• Financial fundamentals below average • Weak management • Poor information disclosure

8 (CC) Substandard Risk

• Well-defined weaknesses though significant loss unlikely; orderly liquidation of debt under threat

• Continued strength is on collateral or residual repayment capacity of obligor

• Partial losses of principal and interest possible if weaknesses are not promptly rectified

• Questionable management skills

9 (C) Doubtful Risk

• High probability of partial loss • Very weak credit fundamentals which make full debt repayment in

serious doubt • Factors exist that may mitigate the potential loss but awaiting

appropriate time to determine final status • Demonstrable management weaknesses, poor repayment

weaknesses and poor repayment profile

10 (D) Lost

• A definite loss of principal and interest • Lack of capacity to repay unsecured debt • Bleak economic prospects • Though it is still possible to recover sometime in the future, it is

imprudent to defer write - offs Models have been used to estimate the amount of credit exposures, as the value of a product varies with changes in market variables, expected cash flows and time. The assessment of credit risk of a portfolio of assets entails further estimations as to the likelihood of defaults occurring, of the associated loss ratios and of default correlations between parties.


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Ratings and scoring models are in use for all key credit portfolios and form the basis for measuring default risks. In measuring credit risk of loans and advances at a counterparty level, the Group considers three components: (i) The ‘probability of default’ (PD) (ii) Exposures to the counterparty and its likely future development, from which the Group derive the ‘exposure at default’ (EAD); and (iii) The likely recovery ratio on the defaulted obligations (the ‘loss given default’) (LGD). The models are reviewed regularly to monitor their robustness relative to actual performance and amended as necessary to optimise their effectiveness.

(i) Probability of Default (PD) The Group assesses the probability of default of individual counterparties using internal rating tools tailored to the various categories of counterparty. They have been developed internally. This combines statistical analysis with credit officer judgment. The rating template combines both qualitative and quantitative factors to arrive at a rating which is comparable to internationally available standards. The rating methods are subject to an annual validation and recalibration so that they reflect the latest projection in the light of all actually observed defaults. ii. Exposure at Default (EAD) EAD is the amount the Group expects to be owed at the time of default or reporting date. For a loan, this is the face value (principal plus interest). For a commitment, the Group includes any amount already drawn plus the further amount that may have been drawn by the time of default, should it occur. iii Loss Given Default (LGD) Loss given default represents the Group’s expectation of the extent of loss on a claim should default occur. It is expressed as percentage loss per unit of exposure. It typically varies by type of counterparty, type and seniority of claim and availability of collateral or other credit support. The measurement of exposure at default and loss given default is based on the risk parameters standard under Basel II.

Risk Limit Control and Mitigation Policies The Group applies limits to control credit risk concentration and diversification of its risk assets portfolio. The Bank maintains limits for individual borrowers and groups of related borrowers, business lines, rating grade and geographical area. The Bank adopted obligor limits as set by the regulators and it is currently at 20% of the Bank’s shareholders’


88

funds. The obligor limit covers exposures to counterparties and related parties. Although the Bank is guided by this regulatory limit, we apply additional parameters internally in determining the suitable limits that an individual borrower should have. These include: obligor rating, position in the industry and perceived requirements of key players (e.g. import finance limit may be determined by the customer’s import cycle and volume during each cycle), financial analysis, etc. The Bank imposes industry/economic sector limits to guide against concentration risk as a result of exposures to sets of counterparties operating in a particular industry. The industry limits are arrived at after rigorous analysis of the risks inherent in the industry/economic sectors. The limits are usually recommended by the Bank’s Portfolio Management Unit under Credit Risk Management Group and approved by the Board. The limits set for each industry or economic sector depend on the historical performance of the sector as well as the intelligence report on the outlook of the sector. During the period, limits can be realigned (by way of outright removal, reduction or increase) to meet the exigencies of the prevailing macroeconomic events. The Bank also sets internal credit approval limits for various levels of officers in the credit process. Approval decisions are guided by the Bank’s strategic focus as well as the stated risk appetite and the other limits established by the board or regulatory authorities such as Aggregate Large Exposure Limits, Single Obligor Limits, Geographical Limits, Industry/ Economic sector limits etc. The lending authority in the Bank flows through the management hierarchy with the final authority residing with the Board of Directors as indicated below:

Designation Limit

Board of Directors Up to the single obligor limit as advised by the regulatory authorities from time to time but currently put at 20% of shareholders’ funds (total equity)

Management Credit Committee Up to N500 Million Managing Director Up to N200 Million Deputy Managing Director Up to N150 Million Other Approving Officers as delegated by the managing director The above limits are subject to the following overriding approvals: •Except where a facility is cash collateralized, all new facilities below N10million require the approval of the Credit Committee. •The deposit required for all cash collateralized facilities (with the exception of bonds, guarantees and indemnities) must be 125% of the facility amount to provide a cushion for interest and other charges. •Totally new facilities require one-up approval i.e. approval at a level higher than that of the person that would ordinarily approve it.


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Master Netting Arrangements The Group further restricts its exposure to credit losses by entering into master netting arrangements with counterparties with which it undertakes a significant volume of transactions. The right to set off is triggered at default. By so doing, the credit risk associated with favourable contracts is reduced by a master netting arrangement to the extent that if a default occurs, all amounts with the counterparty are terminated and settled on a net basis. The Group’s overall exposure to credit risk on derivative instruments subject to master netting arrangements can change substantially within a short period, as it is affected by each transaction subject to the arrangement. Off-balance sheet engagements These instruments are contingent in nature and carry the same credit risk as loans and advances. As a policy, the Bank ensures that all its off-balance sheet exposures are subjected to the same rigorous credit analysis, like that of the on-balance sheet exposures, before availment. The major off-balance sheet items in the Bank’s books are Bonds and Guarantees, which the Bank will only issue where it has full cash collateral or a counter indemnity from a first class bank, or another acceptable security. Contingencies Contingent assets which include transaction related bonds and guarantees, letters of credit and short term foreign currency related transactions, are not recognized in the annual financial statements but are disclosed when, as a result of past events, it is highly likely that economic benefits will flow to the group, but this will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events which are not wholly within the group’s control. Contingent liabilities include transaction related bonds and guarantees, letters of credit and short term foreign currency related transactions. Contingent liabilities are not recognized in the annual financial statements but are disclosed in the notes to the annual financial statements unless they are remote. Placements The Bank has placement lines for its Bank counterparties. The lines cover the settlement risks inherent in our activities with these counterparties. The limits are arrived at after conducting fundamental analysis of the counterparties, presentation of findings to, and approval by the Bank’s Management Credit Committee. The lines are monitored by Credit Risk Management Group. As a rule, the Bank’s placements with local banks are backed with treasury bills.

Notes to the financial statements


Maximum exposure to credit risk before collateral held or other credit enhancements

Credit risk exposure relating to On-Balance Sheet

Credit risk exposures relating to on-balance sheet assets are as follows:

In thousands of Nigerian naira

Classification Jun-2013 Dec-2012 Jun-2013 Dec-2012

Cash and cash equivalents:

- Balances held with other banks 100,037,447 120,706,024 60,251,415 74,806,177

- Money market placements 101,044,238 147,427,096 101,169,892 150,528,705

Loans and advances to banks 4,143,418 4,864,824 32,498 177,985

Loans and advances to customers:

- Loans to individuals 59,221,359 53,514,206 45,301,539 40,379,787

- Loans to non-individuals 835,641,617 725,535,812 803,008,053 702,057,157

Financial assets held for trading

- Debt securities 31,066,348 271,073,896 27,358,077 267,417,182


- Debt securities 410,842,892 142,417,007 384,014,760 126,201,716

Assets pledged as collateral:

- Debt securities 27,529,108 31,203,230 27,529,108 31,203,230

Other assets27,081,328 2,697,108 1,740,673 738,071

Total 1,576,607,755 1,499,439,203 1,450,406,015 1,393,510,010

Loans exposure to total exposure 57% 52% 58% 53%

Debt securities exposure to total

exposure 30% 30% 30% 30%Other exposures to total exposure 13% 18% 12% 17%

2 Balances included in Other Assets above are those subject to credit risks. Items not subject to credit risk, which

include Restricted deposits with Central Bank of Nigeria and Recognised assets for defined benefit obligations

have been excluded.

The table above shows a worst-case scenario of credit risk exposure to the Group as at 30 June 2013

and 31 December 2012 without taking account of any collateral held or other credit enhancements attached. For

on-balance-sheet assets, the exposures set out above are based on amounts reported in the statements of

financial position.

As shown above, 57% (Parent: 58% ) of the total maximum exposures is derived from loans and advances to banks

and customers (2012: 52%; Parent: 53%); while 30% (Parent: 30%) represents exposure to investments in debt

securities (2012: 30%; Parent: 30%). The Directors are confident in their ability to continue to control exposure to

credit risk which can result from both its Loans and Advances portfolio and Debt securities.

Maximum exposure

ParentGroup

Maximum exposure

90



Loans and advances to customers is analysed below:

Jun-2013 Dec-2012 Jun-2013 Dec-2012

Loans to individuals:

Overdraft 5,586,556 7,893,185 2,978,713 2,736,101

Loans 53,354,231 45,493,481 42,322,826 37,643,686

Others 280,572 127,540 - -

59,221,359 53,514,206 45,301,539 40,379,787

Loans to non-individuals:

Overdraft 129,214,257 113,622,169 115,858,578 106,024,097

Loans 593,728,862 511,778,386 579,555,213 500,319,477

Others1112,698,498 100,135,257 107,594,262 95,713,583

835,641,617 725,535,812 803,008,053 702,057,157

1 Others include CBN Commercial Agric Credit Scheme (CACS) loans, Bank of Industry (BOI) and Usances.

Credit risk exposure relating to Off-Balance Sheet

Credit risk exposures relating to off-blance sheet items are as follows:


Jun-2013 Dec-2012 Jun-2013 Dec-2012

Financial guarantees 393,884,665 363,927,051 385,272,985 355,132,185

Other contingents 247,870,980 163,526,110 222,510,440 139,838,942

Total 641,755,645 527,453,161 607,783,425 494,971,127

Parent

Maximum exposure Maximum exposure

Group Parent

Group

91



Credit quality of money market placements and financial assets held for trading

The credit quality of money market placements are assessed by reference to external credit ratings information

about counterparty default rates.

Money market placements

In thousands of Nigerian naira Jun-2013 Dec-2012 Jun-2013 Dec-2012

Counterparties with external credit rating (S&P)

A 63,644,417 98,780,165 63,644,417 100,858,327

AA 3,257,547 1,373,120 3,257,547 1,402,008

BB - 15,674,605 - 16,004,372

66,901,964 115,827,890 66,901,964 118,264,707

Counterparties without external credit rating

Local Banks 8,413,001 - 8,413,001 -

Local Discount Houses 25,729,273 31,599,206 18,506,336 21,359,936

Foreign Subsidiaries - - 7,348,591 10,904,062

34,142,274 31,599,206 34,267,928 32,263,998

101,044,238 147,427,096 101,169,892 150,528,705

Investment Securities

The credit quality of investment securities are assessed by reference to external credit ratings information

about counterparty default rates.

In thousands of Nigerian naira Jun-2013 Dec-2012 Jun-2013 Dec-2012

Counterparties with external credit rating (S&P):

B - - - 3,930,048

BB 371,380,266 106,940,196 371,380,266 106,940,196

Counterparties with external credit rating (Agusto):

A 12,319,966 9,845,979 12,319,966 9,845,979

AA 314,528 - 314,528 -

BB - 3,212,295 - 3,212,295

BBB - 2,273,197 - 2,273,198

Unrated 26,828,132 20,145,340 - -

410,842,892 142,417,007 384,014,760 126,201,716

The Bank held financial assets held for trading and assets pledged as collateral of N27,358,077,000 and

N27,529,108,000 as at 30 June, 2013 respectively (2012 :N267,417,182,000 and N31,203,230,000). The financial

assets are bonds and treasury bills issued by the Federal Government of Nigeria and bear the sovereign risk of the

Federal Government of Nigeria. The federal republic of Nigeria currently has a foreign long term issuer credit

rating of BB (S&P).

Parent

Credit quality Credit quality

Group Parent

Credit quality Credit quality

Group

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(i) Geographical Sector

Concentration of risks of financial assets with credit risk exposure

The following table breaks down the Group’s credit exposure (without taking into account any

collateral held or other credit support), as categorised by geographical region as at the reporting date. For this table,

the Group has allocated exposures to regions based on the country of domicile of its counterparties.


Group

Jun-2013


Classification Nigeria Rest of Africa Outside Africa Total


- Balances held with other banks 9,413,318 7,952,713 82,671,416 100,037,447


Loans and advances to banks 32,498 69,809 4,041,111 4,143,418



- Loans to non-individuals 801,577,979 33,521,407 542,231 835,641,617


- Debt securities 27,358,077 3,708,271 - 31,066,348


- Debt securities 384,014,760 22,670,073 4,158,059 410,842,892


- Debt securities 27,529,108 - - 27,529,108

Other assets2

1,740,673 5,115,403 225,252 7,081,328

1,317,385,289 86,980,982 172,241,484 1,576,607,755



have been excluded.

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Group

Jun-2013




Overdraft 2,978,713 2,607,597 246 5,586,556

Loans 42,322,826 3,832,201 7,199,204 53,354,231

Others - 280,572 - 280,572 45,301,539 6,720,370 7,199,450 59,221,359


Overdraft 114,428,506 14,243,520 542,231 129,214,257

Loans 579,555,211 14,173,651 - 593,728,862

Others1107,594,262 5,104,236 - 112,698,498 801,577,979 33,521,407 542,231 835,641,617

1 Others include CBN Commercial Agric Credit Scheme (CACS) loans, Bank of Industry (BOI) and Usance.


Credit Risk Exposure relating to off-balance sheet items are as follows:

Group

Jun-2013


Nigeria Rest of Africa Outside Africa Total



607,783,425 27,572,463 6,399,757 641,755,645

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Dec-2012

Geographical Classifications


Group




- Balances held with other banks 50,354 15,054,757 105,600,913 120,706,024


Loans and advances to banks 177,985 - 4,686,839 4,864,824



- Loans to non-individuals 700,627,084 24,691,348 217,380 725,535,812


- Debt securities 267,417,182 3,656,714 - 271,073,896

Hedging derivatives


- Debt securities 118,341,620 17,827,016 6,248,371 142,417,007


- Debt securities 31,203,230 - - 31,203,230

Other assets2738,071 1,742,918 216,119 2,697,108

1,197,701,628 83,824,493 217,913,082 1,499,439,203


include Restricted deposits with Central Bank of Nigeria and Recognised assets for defined benefit obligations have been excluded.

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Group




Overdraft 2,736,100 5,154,034 3,051 7,893,185

Loans 37,643,686 1,520,046 6,329,749 45,493,481

Others - 127,540 - 127,540

40,379,786 6,801,620 6,332,800 53,514,206


Overdraft 104,594,025 8,810,764 217,380 113,622,169

Loans 500,319,476 11,458,910 - 511,778,386

Others195,713,583 4,421,674 - 100,135,257

700,627,084 24,691,348 217,380 725,535,812

1 Others include CBN Commercial Agric Credit Scheme (CACS) loans, Bank of Industry (BOI) and Usance



Dec-2012

Group





494,971,127 24,517,661 7,964,373 527,453,161

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Geographical Sector

Concentration of risks of financial assets with credit risk exposure

The following table breaks down the Parent’s credit exposure (without taking into account any

collateral held or other credit support), as categorised by geographical region as at the reporting date. For this table,

the Group has allocated exposures to regions based on the country of domicile of its counterparties.


Parent

Jun-2013




- Balances held with other banks 9,343,013 248,696 50,659,706 60,251,415

- Money market placements 20,417,337 496,103 80,256,452 101,169,892

Loans and advances to banks 32,498 - - 32,498


- Loans to individuals 45,301,539 - - 45,301,539

- Loans to non-individuals 803,008,053 - - 803,008,053


- Debt securities 27,358,077 - - 27,358,077

Hedging derivatives


- Debt securities 384,014,760 - - 384,014,760


- Debt securities 27,529,108 - - 27,529,108

Other assets21,740,673 - - 1,740,673

1,318,745,058 744,799 130,916,158 1,450,406,015



have been excluded.

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Parent

Jun-2013




Overdraft 2,978,713 - - 2,978,713

Loans 42,322,826 - - 42,322,826

Others1- - - -

45,301,539 - - 45,301,539


Overdraft 115,858,578 - - 115,858,578

Loans 579,555,213 - - 579,555,213

Others1107,594,262 - - 107,594,262

803,008,053 - - 803,008,053




Parent

Jun-2013



Financial guarantees 385,272,985 - - 385,272,985

Other contingents 222,510,440 - - 222,510,440

607,783,425 - - 607,783,425

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Geographical Classifications


Dec-2012

Parent




- Balances held with other banks - 971,353 73,834,824 74,806,177


Loans and advances to banks 177,985 - - 177,985


- Loans to individuals 40,379,787 - - 40,379,787

- Loans to non-individuals 702,057,157 - - 702,057,157


- Debt securities 267,417,182 - - 267,417,182

Hedging derivatives


- Debt securities 122,271,668 - 3,930,048 126,201,716


- Debt securities 31,203,230 - - 31,203,230

Other assets2738,071 - - 738,071

1,203,011,396 7,695,626 182,802,988 1,393,510,010


include Restricted deposits with Central Bank of Nigeria and Recognised assets for defined benefit obligations have been excluded.

99




Dec-2012

Parent




Overdraft 2,736,101 - - 2,736,101

Loans 37,643,686 - - 37,643,686

Others - - - -

40,379,787 - - 40,379,787


Overdraft 106,024,097 - - 106,024,097

Loans 500,319,477 - - 500,319,477

Others195,713,583 - - 95,713,583

702,057,157 - - 702,057,157




Dec-2012

Parent



Financial guarantees 355,132,185 - - 355,132,185

Other contingents 139,838,942 - - 139,838,942

494,971,127 - - 494,971,127

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Notes to the financial statementsGuaranty Trust Bank and Subsidiary Companies

(ii) Industry sectors

The following table breaks down the Group’s credit exposure at gross amounts (without taking into account any collateral held or other credit support), as categorised by the industry sectors of the

Group’s counterparties.

Credit Risk Exposure to on-balance sheet items

Group

Jun-2013


Capital market Construction/ General Mining, Info.Telecoms

Classification Agriculture & Financial institution real estate Education Commerce Government Manufacturing oil & gas & Transport.2Individual Others 1 Total


- Balances held with other banks - 100,037,447 - - - - - - - - - 100,037,447

- Money market placements - 93,816,507 - - 7,227,731 - - - - - - 101,044,238

Loans and advances to banks - 4,143,418 - - - - - - - - - 4,143,418


- Loans to individuals 1,458 - 9,798,299 3,535 - 556,273 - 3,642 - 45,301,539 3,556,613 59,221,359

- Loans to non-individuals 5,749,951 4,523,557 66,732,176 8,465,430 60,823,961 83,042,477 170,524,700 216,889,954 130,404,398 - 88,485,013 835,641,617


- Debt securities - - - - - 31,066,348 - - - - - 31,066,348

Investment securities

- Debt securities - - - - 11,867,711 396,558,614 2,416,567 - - - - 410,842,892

Assets pledged as collateral

- Debt securities - - - - - 27,529,108 - - - - - 27,529,108

Other assets - - - - 1,356,549 - - - - - 5,724,779 7,081,328

5,751,409 202,520,929 76,530,475 8,468,965 81,275,952 538,752,820 172,941,267 216,893,596 130,404,398 45,301,539 97,766,405 1,576,607,755

1 Includes Engineering Services, Hospitality, Clubs, Cooperative Societies etc.2 Logistics, Maritime and Haulage.

Loans and advances to customers is analysed below

Group

Jun-2013





Overdraft 1,458 - 2,469,411 - - - - 3,642 - 2,978,713 133,332 5,586,556

Loans - - 7,328,888 3,535 - 556,273 - - - 42,322,826 3,142,709 53,354,231

Others - - - - - - - - - - 280,572 280,572

1,458 - 9,798,299 3,535 - 556,273 - 3,642 - 45,301,539 3,556,613 59,221,359


Overdraft 2,406,071 1,516,707 19,320,245 994,613 25,679,502 2,021,876 29,984,732 21,811,544 13,794,253 - 11,684,714 129,214,257

Loans 2,278,228 3,006,850 47,320,280 7,470,817 20,398,764 80,177,733 73,598,393 177,437,171 115,967,484 - 66,073,142 593,728,862

Others 1,065,652 - 91,651 - 14,745,695 842,868 66,941,575 17,641,239 642,661 - 10,727,157 112,698,498

5,749,951 4,523,557 66,732,176 8,465,430 60,823,961 83,042,477 170,524,700 216,889,954 130,404,398 - 88,485,013 835,641,617

101


Credit Risk Exposure to off-balance sheet items

Group

Jun-2013




Financial guarantees 202,288 5,739,175 275,484,242 201,166 16,267,658 6,159,448 4,432,736 1,018,845 7,552,594 - 76,826,513 393,884,665

Other contingents 382,894 64,304,790 6,265,084 102,106 202,930 - 13,674,770 29,997,391 5,132,514 21,404,062 106,404,439 247,870,980

Total 585,182 70,043,965 281,749,326 303,272 16,470,588 6,159,448 18,107,506 31,016,236 12,685,108 21,404,062 183,230,952 641,755,645


102



Group

Dec-2012






- Money market placements - 147,427,096 - - - - - - - - - 147,427,096

Loans and advances to banks - 4,864,824 - - - - - - - - - 4,864,824


- Loans to individuals - 603,326 6,363,981 1,020 - 461,953 - 2,505,424 - 40,379,787 3,198,715 53,514,206



- Debt securities - 3,656,714 - - - 267,417,182 - - - - - 271,073,896


- Debt securities - 11,299,756 - - - 128,397,776 2,719,475 - - - - 142,417,007


- Debt securities - - - - - 31,203,230 - - - - - 31,203,230

Other assets - 711,611 - - - - - - - - 1,985,497 2,697,108

3,295,351 295,734,248 57,465,541 6,819,219 66,155,816 494,577,032 175,662,186 167,944,456 107,489,633 40,379,787 83,915,934 1,499,439,203



Group

Dec-2012





Overdraft - 603,326 3,052 - - - - 2,501,593 - 2,736,101 2,049,113 7,893,185

Loans - - 6,360,929 1,020 - 461,953 - 3,831 - 37,643,686 1,022,062 45,493,481

Others - - - - - - - - - - 127,540 127,540

- 603,326 6,363,981 1,020 - 461,953 - 2,505,424 - 40,379,787 3,198,715 53,514,206


Overdraft 829,169 2,357,269 8,335,806 412,918 29,391,646 454,013 25,854,714 17,074,060 12,442,610 - 16,469,964 113,622,169

Loans 1,272,896 4,107,628 42,400,462 6,405,281 19,851,316 65,689,761 87,326,717 135,108,094 94,421,905 - 55,194,326 511,778,386

Others 1,193,286 - 365,292 - 16,912,854 953,117 59,761,280 13,256,878 625,118 - 7,067,432 100,135,257

3,295,351 6,464,897 51,101,560 6,818,199 66,155,816 67,096,891 172,942,711 165,439,032 107,489,633 - 78,731,722 725,535,812


Group

Dec-2012





Other contingents - 63,564,500 1,138,778 79,000 6,997,141 - 38,267,725 20,025,982 4,311,915 14,757,752 14,383,317 163,526,110

Total 153,282 68,377,331 229,578,792 482,666 37,339,389 8,534,342 41,333,033 44,144,123 10,054,807 14,757,752 72,697,644 527,453,161

103


The following table breaks down the Parent’s credit exposure at gross amounts (without taking into account any collateral held or other credit support), as categorised by the industry sectors of the

Parent’s counterparties.


ParentJun-2013







Loans and advances to banks - 32,498 - - - - - - - - - 32,498


- Loans to individuals - - - - - - - - - 45,301,539 - 45,301,539



- Debt securities - - - - - 27,358,077 - - - - - 27,358,077


- Debt securities - - - - - 381,598,193 2,416,567 - - - - 384,014,760


- Debt securities - - - - - 27,529,108 - - - - - 27,529,108

Other assets - - - - - - - - - - 1,740,673 1,740,673

4,614,131 166,865,222 61,824,585 8,465,430 60,823,961 519,497,842 168,915,390 211,815,666 130,404,398 45,301,539 71,877,851 1,450,406,015



Parent

Jun-2013





Overdraft - - - - - - - - - 2,978,713 - 2,978,713

Loans - - - - - - - - - 42,322,826 - 42,322,826

Others - - - - - - - - - - - -

- - - - - - - - - 45,301,539 - 45,301,539


Overdraft 1,270,251 2,404,567 14,412,654 994,613 25,679,502 1,991,863 25,958,855 20,952,617 13,794,253 - 8,399,403 115,858,578

Loans 2,278,228 3,006,850 47,320,280 7,470,817 20,398,764 80,177,733 73,598,393 173,221,810 115,967,484 - 56,114,854 579,555,213

Others 1,065,652 - 91,651 - 14,745,695 842,868 66,941,575 17,641,239 642,661 - 5,622,921 107,594,262

4,614,131 5,411,417 61,824,585 8,465,430 60,823,961 83,012,464 166,498,823 211,815,666 130,404,398 - 70,137,178 803,008,053


ParentJun-2013




Financial guarantees 148,230 3,380,465 274,838,400 201,166 16,267,658 6,159,448 3,677,859 - 7,552,594 - 73,047,165 385,272,985

Other contingents 382,894 60,246,815 6,265,084 102,106 202,930 - 13,674,770 21,871,517 5,132,514 21,404,062 93,227,748 222,510,440

Total 531,124 63,627,280 281,103,484 303,272 16,470,588 6,159,448 17,352,629 21,871,517 12,685,108 21,404,062 166,274,913 607,783,425

104



Parent

Dec-2012







Loans and advances to banks - 177,985 - - - - - - - - - 177,985


- Loans to individuals - - - - - - - - - 40,379,787 - 40,379,787



- Debt securities - - - - - 267,417,182 - - - - - 267,417,182


- Debt securities - 3,930,048 - - - 119,552,193 2,719,475 - - - - 126,201,716


- Debt securities - - - - - 31,203,230 - - - - - 31,203,230

Other assets - - - - - - - - - - 738,071 738,071

3,174,991 237,120,524 48,722,125 6,818,199 66,155,816 485,236,671 171,896,964 164,358,257 107,489,633 40,379,787 62,157,043 1,393,510,010


Parent

Dec-2012




Loans and advances to customers


Overdraft - - - - - - - - - 2,736,101 - 2,736,101

Loans - - - - - - - - - 37,643,686 - 37,643,686

Others - - - - - - - - - - - -

- - - - - - - - - 40,379,787 - 40,379,787


Overdraft 711,301 3,569,981 7,316,514 412,918 29,391,646 421,188 25,242,601 16,267,347 12,442,610 - 10,247,991 106,024,097

Loans 1,271,073 4,107,628 41,405,611 6,405,281 19,851,316 65,689,761 85,020,435 134,907,640 94,421,905 - 47,238,827 500,319,477

Others 1,192,617 - - - 16,912,854 953,117 58,914,453 13,183,270 625,118 - 3,932,154 95,713,583

3,174,991 7,677,609 48,722,125 6,818,199 66,155,816 67,064,066 169,177,489 164,358,257 107,489,633 - 61,418,972 702,057,157


Parent

Dec-2012





Other contingents - 57,841,156 1,138,778 79,000 6,997,141 - 38,267,725 8,528,520 4,311,915 14,757,752 7,916,955 139,838,942

Total 148,230 60,412,958 229,298,184 482,666 37,339,389 8,534,342 40,384,387 29,579,132 10,054,807 14,757,752 63,979,280 494,971,127

105


106

Impairment and provisioning policies Impaired loans and securities Impaired loans and securities are loans and securities for which the Group determines that it is probable that it will be unable to collect principal and interest due according to the contractual terms of the loan / securities agreement(s). These are loans and securities specifically impaired and are graded 8 to 10 in the Group’s internal credit risk grading system. Past due but not impaired loans Loans and securities where contractual interest or principal payments are past due but the Group believes that impairment is not appropriate on the basis of the level of security / collateral available and / or the stage of collection of amounts owed to the Group. Loans with renegotiated terms Loans with renegotiated terms are loans that have been restructured due to deterioration in the borrower’s financial position and where the Group has made concessions that it would not otherwise consider. Once the loan is restructured it remains in this category independent of satisfactory performance after restructuring. Allowances for impairment The Group establishes an allowance for impairment losses that represents its estimate of incurred losses in its loan portfolio. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loan loss allowance, established for groups of homogeneous assets in respect of losses that have been incurred but have not been identified on loans subject to individual assessment for impairment. Write-off policy The Group writes off a loan / security balance (and any related allowances for impairment losses) when Group Management Credit Committee determines that the loans / securities are uncollectible. This determination is reached after considering information such as the occurrence of significant changes in the borrower / issuer’s financial position such that the borrower / issuer can no longer pay the obligation, or that proceeds from collateral will not be sufficient to pay back the entire exposure. For smaller balance standardised loans, charge off decisions are generally based on a product specific past due status.


107

Loans and advances All loans and advances are categorized as follows:

• Neither past due nor impaired: These are loans and advances where contractual interest or principal payments are not past due. These loans and advances belong to the investment grade (i.e. rating grades 1 – 3).

• Past due but not impaired:

These are loans and advances where contractual interest or principal payments are past due but individually assessed as not being impaired. The Group believes that impairment is not appropriate on the basis of the level of receivable/security/collateral available and/or the stage of collection of amounts owed to the Group.

• Individually impaired:

Individually impaired are loans and advances for which the Group determines that it is probable that it will be unable to collect all principal and interest due according to the contractual terms of the loan/advance agreement(s). These are loans and advances specifically impaired and are graded 8 to 10 in the Group’s internal credit risk grading system.

• Collectively impaired:

Collectively impaired are portfolios of homogenous loans and advances where contractual interest or principal payments are not past due, but have been assessed for impairment by the Group. These loans are graded 4 to 7 in the Group’s internal credit grading system.



Loans and advances

Loans and advances are summarised as follows:

Group


Loans to

Individual

Loans to non-

Individual Loans to Banks Total

Loans to non-

Individual

Loans to

Corporate

Loans to

Banks Total

Neither past due nor impaired 14,319,292 550,876,073 4,110,920 569,306,285 30,937,829 495,765,771 4,723,234 531,426,834

Past due but not impaired 44,478 819,551 - 864,029 53,152 688,469 - 741,621

Individually impaired 580,964 29,946,033 - 30,526,997 1,074,391 25,754,634 3 26,829,028

Collectively Impaired 45,473,358 273,082,652 32,507 318,588,517 22,501,865 221,536,192 141,828 244,179,885

Gross 60,418,092 854,724,309 4,143,427 919,285,828 54,567,237 743,745,066 4,865,065 803,177,368

Less allowances for impairment:

Individually impaired 290,305 13,929,967 - 14,220,272 901,973 14,911,699 3 15,813,675

Portfolio allowance 906,428 5,152,725 9 6,059,162 151,058 3,297,555 238 3,448,851

Total allowance 1,196,733 19,082,692 9 20,279,434 1,053,031 18,209,254 241 19,262,526

Net Loans and Advances 59,221,359 835,641,617 4,143,418 899,006,394 53,514,206 725,535,812 4,864,824 783,914,842

The total impairment for loans and advances is N20,279,434,000 (2012: N19,262,526,000) of which N14,220,272,000 (2012: N15,813,675,000) represents the

impairment on individually impaired loans and the remaining amount of N6,059,162,000 (2012: N3,448,851,000) represents the portfolio allowance.

Further information of the impairment allowance for loans and advances to banks and to customers is provided in Notes 24 and 25.

Jun-2013 Dec-2012

108



Parent


Loans to

Individual

Loans to non-

Individual Loans to Banks Total

Loans to non-

Individual

Loans to non-

Individual

Loans to

Banks Total

Neither past due nor impaired 5,156,732 526,298,796 - 531,455,528 19,922,981 491,296,008 36,395 511,255,384

Past due but not impaired - 444,650 - 444,650 6,498 388,537 - 395,035

Individually impaired - 24,605,148 - 24,605,148 759,351 20,705,518 3 21,464,872

Collectively Impaired 40,869,564 268,498,045 32,507 309,400,116 20,413,906 205,764,244 141,828 226,319,978

Gross 46,026,296 819,846,639 32,507 865,905,442 41,102,736 718,154,307 178,226 759,435,269

Less allowances for impairment:

Individually impaired - 11,957,934 - 11,957,934 594,416 12,976,805 3 13,571,224

Portfolio allowance 724,757 4,880,652 9 5,605,418 128,533 3,120,345 238 3,249,116

Total allowance 724,757 16,838,586 9 17,563,352 722,949 16,097,150 241 16,820,340

Net Loans and Advances 45,301,539 803,008,053 32,498 848,342,090 40,379,787 702,057,157 177,985 742,614,929

The total impairment for loans and advances is N17,563,352,000 (2012: N16,820,340,000) of which N11,957,934,000 (2012: N13,571,224,000) represents the

impairment on individually impaired loans and the remaining amount of N5,605,418,000 (2012: N3,249,116,000) represents the portfolio allowance.

Further information of the impairment allowance for loans and advances to banks and to customers is provided in Notes 24 and 25.

Dec-2012 Jun-2013

109



(i) Loans and advances neither past due nor impaired.

The credit quality of the portfolio of loans and advances that were neither past due nor impaired can be assessed by reference to the internal rating system

adopted by the Group.

Group

Jun-2013


Loans and

advances to

banks

Bank

Rating Overdraft Loans Others Overdraft Loans Others Overdraft Total

Exceptional capacity 741,060 663,447 - 20,770,742 55,641,506 - 4,041,007 81,857,762

Very strong capacity 127,128 108,256 - 21,753,285 147,819,855 38,744,188 - 208,552,712

Strong repayment capacity 313,098 12,366,303 - 25,942,481 208,921,041 31,282,975 69,913 278,895,811

Total 1,181,286 13,138,006 - 68,466,508 412,382,402 70,027,163 4,110,920 569,306,285

Group

Dec-2012


Loans and

advances to

banks

Bank


Exceptional capacity 3,517,137 466,550 - 2,758,155 111,384,025 - 4,686,735 122,812,602


Strong repayment capacity 660,814 25,854,992 82,411 37,825,969 162,368,624 28,132,697 36,499 254,962,006

Total 4,204,881 26,650,537 82,411 62,295,475 356,958,135 76,512,161 4,723,234 531,426,834


Individuals Non-individuals



110



Parent

Jun-2013


Loans and

advances to

banks

Bank


Exceptional capacity - - - 11,471,045 55,641,506 - - 67,112,551


Strong repayment capacity 229,731 4,860,141 - 24,859,192 208,605,603 31,282,975 - 269,837,642

Total 266,014 4,890,718 - 44,204,669 412,066,964 70,027,163 - 531,455,528

Parent

Dec-2012


Loans and

advances to

banks

Bank


Exceptional capacity - - - 3,089,120 111,198,024 - - 114,287,144


Strong repayment capacity 619,071 19,142,766 - 34,813,801 162,368,624 28,132,697 36,395 245,113,354

Total 646,001 19,276,980 - 58,011,713 356,772,134 76,512,161 36,395 511,255,384





111



(ii) Loans and advances past due but not impaired

Clearing cheques, late processing and other administrative delays on the side of the borrower can lead to a financial

asset being past due but not impaired. Therefore, loans and advances less than 90 days past due are not usually

considered impaired, unless other information is available to indicate the contrary. Gross amount of loans and

advances by class to customers that were past due but not impaired were as follows:

Group

Jun-2013


Age

Loans to

Individual

Loans to Non-

individual Total

0 - 90 days 9,366 48,686 58,052

91 - 180 days 10,206 457,864 468,070

181 - 365 days 24,906 313,001 337,907

44,478 819,551 864,029

FV of collateral 1,038,786 560,000 1,598,786

Amount of undercollateralisation - 259,551 -

Group

Dec-2012


Age

Loans to

Individual

Loans to Non-

individual Total

0 - 90 days 34,635 24,210 58,845

91 - 180 days 6,497 200,566 207,063

181 - 365 days 12,020 463,693 475,713

53,152 688,469 741,621

FV of collateral 426,342 9,106,941 9,533,283

Amount of undercollateralisation - - -

112



Parent

Jun-2013


Age

Loans to

Individual

Loans to Non-

individual Total

0 - 90 days - - -

91 - 180 days - 444,650 444,650

181 - 365 days - - -

- 444,650 444,650

FV of collateral - 560,000 560,000


Parent

Dec-2012


Age

Loans to

Individual

Loans to Non-

individual Total

0 - 90 days 1 7,609 7,610

91 - 180 days 6,497 169,160 175,657

181 - 365 days - 211,768 211,768

6,498 388,537 395,035

FV of collateral 83,351 6,901,889 6,985,240


Upon initial recognition of loans and advances, the fair value of collateral is based on valuation techniques commonly

used for the corresponding assets. In subsequent periods, the fair value is assessed by reference to market price or

indexes of similar assets.

(iii) Loans and advances individually impaired

The breakdown of the gross amount of individually impaired loans and advances by class, along with the fair value of

related collateral held by the Group as security, are as follows:

Group

Jun-2013


Loans to

Individual

Loans to Non-

individual Loans to Banks Total

Gross amount 580,964 29,946,033 - 30,526,997

Impairment 290,305 13,929,967 - 14,220,272

Net Amount 290,659 16,016,066 - 16,306,725

FV of collateral 66,840 15,672,870 - 15,739,710

Amount of undercollateralisation 223,819 343,196 - 567,015

113



Group

Dec-2012


Loans to

Individual

Loans to Non-


Gross amount 1,074,391 25,754,634 3 26,829,028

Impairment 901,973 14,911,699 3 15,813,675

Net Amount 172,418 10,842,935 - 11,015,353

FV of collateral 541,203 17,388,830 - 17,930,033

Amount of undercollateralisation - - - -

Upon initial recognition of loans and advances, the fair value of collateral is based on valuation techniques commonly

used for the corresponding assets. In subsequent periods, the fair value is assessed by reference to market price or

indexes of similar assets.

Parent

Jun-2013


Loans to

Individual

Loans to Non-


Gross amount - 24,605,148 - 24,605,148

Impairment - 11,957,934 - 11,957,934

Net Amount - 12,647,214 - 12,647,214

FV of collateral - 14,597,345 - 14,597,345


Parent

Dec-2012


Loans to

Individual

Loans to Non-


Gross amount 759,351 20,705,518 3 21,464,872

Impairment 594,416 12,976,805 3 13,571,224

Net Amount 164,935 7,728,713 - 7,893,648

FV of collateral 477,068 16,915,353 - 17,392,421


(iv) Undercollaterisation of individual loans against gross loans is shown below:



Past due and impaired:

Gross loans 13,718,063 - 13,552,720 -

Collateral 8,603,482 - 8,499,785 -

Undercollaterisation (5,114,581) - (5,052,935) -

Collectively impaired

Gross loans 66,141,833 46,632,920 65,344,629 46,171,208

Collateral 48,553,936 25,733,516 48,447,352 25,478,729

Undercollaterisation (17,587,897) (20,899,404) (16,897,277) (20,692,479)

114


115

(v) Credit collateral

The Group ensures that each credit is reviewed and granted based on the strength of the borrowers’ cash flow. However, the Group also ensures its credit facilities are well secured as a second way out. The policies that guide collateral for facilities are embedded within the Group’s credit policy guide. These include the following policy statements amongst others: Loans to individuals or sole proprietors must be secured by tangible, marketable collateral that has a market value that is supported by a valuation report from a registered estate valuer who is acceptable to the Group. The collateral must also be easy to check and easy to dispose of. This collateral must be in the possession of, or pledged to, the Group. Client’s account balances must be within the scope of cover provided by its collateral.

All collateral offered must have the following attributes: • There must be good legal title • The title must be easy to transfer • It should be easy and relatively cheap to value • The value should be appreciating or at least stable • The security must be easy to sell.

All collateral must be protected by insurance. Exceptions include cash collateral, securities in safe keeping, indemnity or guarantees, or where our interest is general (for instance in a negative pledge). The insurance policy has to be issued by an insurer acceptable to the Bank. All cash collateralized facilities shall have a 20% margin to provide cushion for interest and other charges i.e. only 80% of the deposit or cash collateral may be availed to an obligor. The main collateral types acceptable to the Bank for loans and advances include: • Mortgages over residential properties • Charges over business premises, fixed and floating assets as well as inventory. • Charges over financial instruments such as equities, treasury bills etc. Estimates of fair value are based on the value of collateral assessed at the time of borrowing, and generally are not updated except when a loan is individually assessed as impaired. Collateral generally is not held over loans and advances to banks, except when securities are held as part of reverse repurchase and securities borrowing activity. Collateral usually is not held against investment securities, and no such collateral was held at 30 June, 2013.



Summary of collaterals pledged against loans and advances

An estimate of the fair value of any collateral and other security enhancements held against loans and advances to customers

and banks is shown below:

Group

Jun-2013

In thousands of Nigerian Naira Gross Loans Collateral Gross Loans Collateral

Against individually impaired 30,526,997 15,739,710 - -

Against collectively impaired 318,556,010 681,012,434 32,507 156,000

Against past due but not impaired 864,029 1,598,786 - -

Against neither past due nor impaired 565,195,365 782,551,344 4,110,920 4,041,007

Total 915,142,401 1,480,902,274 4,143,427 4,197,007

There are no under-collaterised loans and advances in current and prior year.

Group

Dec-2012


Against individually impaired 26,829,025 17,930,033 3 -



Against neither past due nor impaired 526,703,600 945,040,470 4,723,234 5,344,039

Total 798,312,303 1,497,670,146 4,865,065 5,591,040

Parent

Jun-2013


Against individually impaired 24,605,148 14,597,345 - -


Against past due but not impaired 444,650 560,000 - -

Against neither past due nor impaired 531,455,528 760,722,397 - -

Total 865,872,935 1,402,134,856 32,507 156,000

Parent

Dec-2012


Against individually impaired 21,464,869 17,392,421 3 -



Against neither past due nor impaired 511,218,989 926,971,258 36,395 98,445

Total 759,257,043 1,440,917,819 178,226 345,446

Loans and advances Loans and advances


to customers to Banks






116



Group


Against individually impaired:

Property 4,125,786 6,584,543 - -

Debt securities 6,120,000 6,023,300 - -

Equities 3,914,105 13,579 - -

Treasury bills - - - -

Cash - 22,500 - -

Guarantees - 218,959 - -

Negative pledge - - - -

ATC*, stock hypothecation and ISPO* 922,689 1,948,165 - -

Others 657,130 3,118,987 - -

Total 15,739,710 17,930,033 - -

Against collectively impaired:

Property 433,374,312 337,650,945 156,000 156,000

Debt securities 90,482,100 87,020,089 - -

Equities 6,114,960 8,709,817 - 90,212

Treasury bills 17,242 19,743 - -

Cash 7,505,947 6,218,878 - -

Guarantees 10,299,197 6,732,930 - -

Negative pledge 3,294,684 17,621,244 - -

ATC*, stock hypothecation and ISPO* 20,408,919 5,555,589 - -

Others 109,515,073 55,637,125 - 789

Total 681,012,434 525,166,360 156,000 247,001

Against past due but not impaired:

Property 1,598,786 8,434,443 - -

Debt securities - 185,500 - -

Equities - 874,550 - -


ATC*, stock hypothecation and ISPO* - 485 - -

Cash - 38,000 - -

Others - 305 - -

Total 1,598,786 9,533,283 - -

Against neither past due nor impaired:

Property 289,788,058 454,179,690 - 5,335,594

Debt securities 196,925,827 275,190,650 - -

Equities 1,430,878 1,847,247 - -

Treasury bills 100,500 - - -

Cash 149,886,204 19,710,365 4,041,007 -

Guarantees 7,406,245 17,381,884 - -

Negative pledge 3,892,615 37,996,826 - -


Others 97,834,942 95,504,558 - 8,445

Total 782,551,344 945,040,470 4,041,007 5,344,039

Grand total 1,480,902,274 1,497,670,146 4,197,007 5,591,040

*ISPO: Irrevocable standing payment order

*ATC: Authority to collect


to customers to banks

117



Parent


Against individually impaired:

Property 3,640,551 6,221,289 - -

Debt securities 6,120,000 6,023,300 - -

Equities 3,914,105 13,579 - -


Cash - 22,500 - -

Guarantees - 218,959 - -

Negative pledge - - - -

ATC*, stock hypothecation and ISPO* 922,689 1,948,165 - -

Others - 2,944,629 - -

Total 14,597,345 17,392,421 - -

Against collectively impaired:

Property 409,600,873 321,258,327 156,000 156,000

Debt securities 90,482,100 87,020,089 - -

Equities 6,114,960 8,709,817 - 90,212

Treasury bills 17,242 19,743 - -

Cash 6,113,851 4,798,278 - -

Guarantees 9,138,546 5,560,884 - -

Negative pledge 3,294,684 17,621,244 - -


Others 81,083,939 39,024,929 - 789

Total 626,255,114 489,568,900 156,000 247,001

Against past due but not impaired:

Property 560,000 5,886,400 - -

Debt securities - 185,500 - -

Equities - 874,550 - -


ATC*, stock hypothecation and ISPO* - 485 - -

Cash - 38,000 - -

Guarantees - - - -

Others - 305 - -

Total 560,000 6,985,240 - -

Against neither past due nor impaired:

Property 272,298,724 439,232,941 - 90,000

Debt securities 197,813,667 276,403,342 - -

Equities 1,430,878 1,847,247 - -

Treasury bills 100,500 - - -

Cash 149,433,213 15,375,210 - -

Guarantees 7,406,245 17,381,884 - -

Negative pledge 3,892,615 37,996,826 - -


Others 93,060,480 95,504,558 - 8,445

Total 760,722,397 926,971,258 - 98,445

Grand total 1,402,134,856 1,440,917,819 156,000 345,446

*ISPO: Irrevocable standing payment order

*ATC: Authority to collect

to customers to banks


118

Notes to the consolidated financial statements


(b) Credit risk (continued)

The table below shows analysis of debt securities into the different classifications:

Group

Jun-2013

In thousands of Nigerian Naira

Financial assets held

for trading

Investment

securities

Assets pledged

as collateral Total

Federal government bonds 15,697,244 7,473,645 - 23,170,889

State government bonds - 5,116,925 - 5,116,925

Corporate bonds - 2,416,567 - 2,416,567

AMCON bonds1- 65,928,491 - 65,928,491

Treasury bills 15,369,104 329,907,264 27,529,108 372,805,476

31,066,348 410,842,892 27,529,108 469,438,348

1 AMCON Bonds are issued by the Asset Management Corporation of Nigeria and are fully guaranteed by the Federal

Government of Nigeria.

The Group’s investment in risk-free Government securities constitutes 99% of debt instruments portfolio

(December 2012: 99%). Investment in corporate bond accounts for the outstanding 1% (December 2012: 1%).

Group

Dec-2012



for trading

Investment

securities

Assets pledged

as collateral Total

Federal government bonds 4,550,387 2,588,210 3,793,372 10,931,969


Corporate bonds - 2,719,476 - 2,719,476

AMCON bonds1

- 68,527,540 - 68,527,540

Treasury bills 266,523,509 55,969,785 27,409,858 349,903,152

271,073,896 142,417,007 31,203,230 444,694,133



Debt securities

119



Parent

Jun-2013



for trading

Investment

securities

Assets pledged

as collateral Total

Federal government bonds 15,697,244 5,101,002 - 20,798,246


Corporate bonds - 2,416,567 - 2,416,567

AMCON bonds1- 65,928,491 - 65,928,491

Treasury bills 11,660,833 305,451,775 27,529,108 344,641,716

27,358,077 384,014,760 27,529,108 438,901,945



The Bank’s investment in risk-free Government securities constitutes 99% of debt instruments portfolio

(December 2012: 98%). Investment in corporate bond accounts for the outstanding 1% (December 2012: 2%).

Parent

Dec-2012



for trading

Investment

securities

Assets pledged

as collateral Total

Federal government bonds 4,550,387 - 3,793,372 8,343,759


Corporate bonds - 6,649,524 - 6,649,524

AMCON bonds1- 68,527,540 - 68,527,540

Treasury bills 262,866,795 38,412,656 27,409,858 328,689,309

267,417,182 126,201,716 31,203,230 424,822,128



120


121

(c) Liquidity risk

The Bank’s liquidity risk management process is primarily the responsibility of the Market Risk Management Group within the ERM Division. A brief overview of the bank’s liquidity management processes during the year includes the following:

1. Maintenance of minimum levels of liquid and marketable assets above the regulatory

requirement of 30%. The Bank has also set for itself more stringent in-house limits above this regulatory requirement to which it adheres.

2. Monitoring of its cash flow and balance sheet trends. The Bank also makes forecasts of

anticipated deposits and withdrawals to determine their potential effect on the Bank.

3. Regular measurement & monitoring of its liquidity position/ratios in line with regulatory requirements and in-house limits

4. Regular monitoring of non-earning assets

5. Monitoring of deposit concentration

6. Ensure diversification of funding sources

7. Monitoring of level of undrawn commitments

8. Maintaining a contingency funding plan.

Funding approach The Bank’s overall approach to funding is as follows:

1. Generation of large pool of low cost deposits. 2. Maintenance of efficiently diversified sources of funds along product lines, business segments

and also regions to avoid concentration risk

The bank was able to meet all its financial commitments and obligations without any liquidity risk exposure in the course of the year. The Group’s Asset and Liability Management Committee (ALMAC) is charged with the responsibility of managing the Group’s daily liquidity position. A daily liquidity position is monitored and regular liquidity stress testing is conducted under a variety of scenarios covering both normal and more severe market conditions. All liquidity policies and procedures are subject to review and approval by ALMAC. The Risk Management Group sets limits which are in conformity with the regulatory limits. The limits are monitored regularly and exceptions are reported to ALMAC as appropriate. In addition gap reports are prepared monthly to measure the maturity mismatches between assets and liabilities. The cumulative gap over total assets is not expected to exceed 20%.


122

(ii) Exposure to liquidity risk The key measure used by the Group for managing liquidity risk is the ratio of net liquid assets to deposits from customers. For this purpose, net liquid assets are considered as including cash and cash equivalents and investment grade debt securities for which there is an active and liquid market less any deposits from banks, debt securities issued, other borrowings and commitments maturing within the next month. A similar calculation is used to measure the Group’s compliance with the liquidity limit established by the Bank’s lead regulator (The Central Bank of Nigeria).

Jun-2013 Dec-2012

At end of period 48.80% 53.32% Average for the period 52.51% 47.62% Maximum for the period 55.44% 54.47% Minimum for the period 48.80% 38.35%



Financial risk management (continued)

Gross nominal inflow / (outflow) disclosed in the table is the contractual, undiscounted cash flow on the financial assets and liabilities.

(iii) Gross nominal (undiscounted) maturities of financial assets and liabilities

Group

Jun-2013

Carrying Gross nominal Less than 3 to 6 6 to 12 1 to 5 More than

In thousands of Nigerian Naira Note amount inflow/outflow 3 months1months months years 5 years

Financial assets

Cash and cash equivalents 23 232,414,899 242,729,454 227,870,387 7,828,802 5,585,628 405,513 1,039,124

Loans and advances to banks 24 4,143,418 4,146,193 3,297,557 836,573 5,295 6,768 -

Loans and advances to customers 25 894,862,976 1,070,671,182 425,528,458 83,829,065 117,585,314 411,016,084 32,712,261

Financial assets held for trading 26 31,066,348 32,079,883 8,166,301 5,972,613 8,808,812 5,848,730 3,283,427


– Available for sale 27 296,801,242 312,730,047 45,049,331 144,319,715 110,534,610 5,686,763 7,139,628

– Held to maturity 27 120,598,110 131,510,258 34,555,834 4,311,238 38,605,275 54,037,911 -

Assets pledged as collateral 28 27,529,108 28,400,000 23,100,000 5,300,000 - - -

Other assets233 162,176,436 168,255,867 126,838,691 6,944,834 5,287,615 23,891,926 5,292,801

1,769,592,537 1,990,522,884 894,406,559 259,342,840 286,412,549 500,893,695 49,467,241

Financial liabilities

Deposits from banks 35 17,657,973 17,658,077 14,839,118 2,818,844 115 - -

Deposits from customers 36 1,254,445,308 1,238,946,702 1,206,472,098 16,659,180 11,149,137 4,660,139 6,148

Debt securities issued 37 94,007,480 96,609,648 - 888,638 888,638 94,832,372 -

Other borrowed funds 40 90,191,530 117,706,203 1,912,474 9,262,768 11,118,362 60,468,571 34,944,028

Other liabilities 38 89,462,161 98,577,878 35,225,664 50,347,359 2,644,106 10,204,413 156,336

1,545,764,452 1,569,498,508 1,258,449,354 79,976,789 25,800,358 170,165,495 35,106,512

Gap (asset - liabilities) (364,042,795) 179,366,051 260,612,191 330,728,200 14,360,729

Cumulative liquidity gap (364,042,795) (184,676,744) 75,935,447 406,663,647 421,024,376

1 Includes balances with no specific contractual maturities

2 Excludes Prepayments

The following tables show the undiscounted cash flows on the Group’s financial assets and liabilities and on the basis of their earliest possible contractual maturity. The

123



Gross nominal (undiscounted) maturities of financial assets and liabilities

Group

Dec-2012



Financial assets

Cash and cash equivalents 23 322,989,480 322,990,405 283,452,298 10,739,413 2,139,411 26,249,087 410,196

Loans and advances to banks 24 4,864,824 4,871,833 3,797,229 1,048,236 26,368 - -


Financial assets held for trading 26 271,073,896 282,146,893 213,811,286 61,329,640 6,853,764 11,735 140,468


– Available for sale 27 15,765,789 18,741,803 1,488,930 839,124 2,512,476 6,925,643 6,975,630

– Held to maturity 27 129,490,810 147,183,617 33,409,820 19,519,935 40,891,436 47,419,727 5,942,699


Other Assets233 102,889,644 104,799,521 97,773,028 1,250,328 1,056,998 851,925 3,867,242

1,657,327,691 1,947,098,812 1,034,612,452 141,220,679 111,703,027 468,597,527 190,965,127


Deposits from banks 35 23,860,259 23,860,206 21,456,454 2,402,991 761 - -

Deposits from customers 36 1,148,197,165 1,150,294,744 1,120,289,146 15,776,220 9,885,074 4,344,304 -

Debt securities issued 37 86,926,227 90,407,506 - 888,638 - 89,518,868 -


Other liabilities 38 80,972,096 80,971,959 29,592,812 13,272,310 2,107,237 35,999,600 -

1,432,517,571 1,471,875,667 1,175,819,540 36,881,398 19,817,899 219,750,967 19,605,863



1 Includes balances with no specific contractual maturities2 Excludes Prepayments

124




Parent

Jun-2013



Financial assets

Cash and cash equivalents 23 180,356,202 190,670,725 181,448,235 4,987,283 4,235,207 - -

Loans and advances to banks 24 32,498 35,381 14,471 8,847 5,295 6,768 -


Financial assets held for trading 26 27,358,077 28,371,610 4,458,028 5,972,613 8,808,812 5,848,730 3,283,427


– Available for sale 27 288,873,847 304,802,651 42,150,000 140,008,131 110,000,000 5,509,740 7,134,780

– Held to maturity 27 101,692,526 112,604,674 28,750,000 - 32,683,032 51,171,642 -


Other assets233 160,742,908 160,742,908 123,012,548 5,848,403 3,913,949 23,295,380 4,672,628

1,634,894,758 1,849,745,789 819,775,661 243,893,739 268,404,224 473,689,988 43,982,177


Deposits from banks 35 1,430,966 1,430,966 1,430,966 - - - -

Deposits from customers 36 1,158,421,656 1,142,923,127 1,138,804,870 3,983,370 134,887 - -

Debt securities issued 37 13,228,726 15,830,914 - 888,638 888,638 14,053,638 -


Other liabilities 38 77,054,502 86,170,187 33,532,036 49,191,913 218,090 3,071,812 156,336

1,420,015,300 1,443,749,317 1,175,477,761 63,127,538 11,890,877 159,628,225 33,624,916




125




Parent

Dec-2012



Financial assets

Cash and cash equivalents 23 256,433,560 256,434,537 220,309,836 9,039,315 1,282,813 25,802,573 -

Loans and advances to banks 24 177,985 185,098 147,866 10,864 26,368 - -

Loans and advances to customers 25 742,436,944 996,851,714 381,485,208 26,119,408 49,857,610 368,862,288 170,527,200

Financial assets held for trading 26 267,417,182 278,490,179 210,154,572 61,329,640 6,853,764 11,735 140,468

Investment securities: -

– Available for sale 27 10,138,761 13,114,716 - - - 6,143,716 6,971,000

– Held to maturity 27 118,897,917 136,590,706 26,630,000 15,000,000 40,891,436 48,761,565 5,307,705


Other assets233 101,660,574 101,660,574 96,327,737 639,336 45,017 781,242 3,867,242

1,528,366,153 1,816,227,524 949,805,219 130,288,563 98,957,008 450,363,119 186,813,615


Deposits from banks 35 7,170,321 7,170,321 7,170,321 - - - -

Deposits from customers 36 1,054,122,573 1,056,220,108 1,048,780,778 7,200,940 129,497 108,893 -

Debt securities issued 37 13,238,291 16,719,551 - 888,638 - 15,830,913 -


Other Liabilities 38 69,872,456 69,872,456 26,892,163 12,859,531 1,615,825 28,504,937 -

1,313,598,059 1,352,956,285 1,087,324,390 25,294,278 8,780,832 213,476,469 18,080,316




126


127

(d) Settlement risk The Group’s activities may give rise to risk at the time of settlement of transactions and trade. Settlement risk is the risk of loss due to the failure of a company to honour its obligations to deliver cash, securities or other assets as contractually agreed. For certain types of transactions the Group mitigates this risk by conducting settlements through a settlement clearing agent to ensure that a trade is settled only when both parties have fulfilled their contractual settlement obligations. Settlement limits form part of the credit approval / limit monitoring process described earlier. Acceptance of settlement risk on free settlement trade requires transaction specific or counterparty specific approvals from Group Risk Management Unit.

(e) Market risk

Market risk is the risk that changes in market prices, such as interest rate, equity prices, foreign exchange rates and credit spreads (not relating to changes in the obligor’s / issuer’s credit standing) will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Management of market risk The Group separates its exposure to market risk between trading and non-trading portfolios. Trading portfolios are mainly held by the Treasury Group, and include positions arising from market making and proprietary position taking, together with financial assets and liabilities that are managed on a fair value basis. With the exception of translation risk arising on the Group’s net investment in its foreign operations, all foreign exchange risks within the Group are monitored by the Treasury Group. Accordingly, the foreign exchange position is treated as part of the Group’s trading portfolios for risk management purposes. Overall authority for market risk is vested in Market Risk Management Committee. However, the Market Risk Management group within the Enterprise-wide Risk Management Division is responsible for the development of detailed risk management policies (subject to review and approval by the Committee) and for the day-to-day review of their implementation. Exposure to market risks – trading portfolios The principal tool used to measure and control market risk exposure within the Group’s trading portfolios is the open position limits using the Earning-at-Risk approach. Specific limits (regulatory and in-house) have been set across the various trading portfolios to prevent undue exposure and the market risk management group ensures that these limits and triggers are adhered to by the bank. The bank traded in the following financial instruments in the course of the year 1. Treasury Bills 2. Bonds (Spot and Repo transactions)


128

3. Foreign currencies (Spot, Forwards and Swaps) 4. Money market products Exposure to interest rate risk – Trading and non-trading portfolios The principal risk to which non-trading portfolios are exposed is the risk of loss from fluctuations in the future cash flows or fair values of financial instruments because of a change in market interest rates. Interest rate risk is managed principally through monitoring interest rate gaps and by having pre-approved limits for re-pricing bands. The ALMAC is the monitoring body for compliance with these limits and is assisted by Risk Management in its day-to-day monitoring activities. A summary of the Group’s interest rate gap position on trading and non-trading portfolios is as follows: The Bank makes use of limit monitoring, earnings-at-risk, gap analyses and scenario analyses to measure and control the market risk exposures within its trading and banking books. The bank also performs regular stress tests on its banking and trading books. In performing this, the bank ensures there are quantitative criteria in building the scenarios. The bank determines the effect of changes in interest rates on interest income; volatility in prices on trading income; and changes in funding sources and uses on the bank’s liquidity. The key potential risks the bank was exposed to from these instruments were foreign exchange risk and interest rate risk (price risk, basis risk). However, all potential risk exposures in the course of the year were successfully mitigated as mentioned above. The Bank has adopted the use of the Standardized Approach for calculating its required market risk capital.



Financial risk management (continued)(iv) Residual contractual maturities of financial assets and liabilities

obligation expected for the assets or liability to be recovered or settled. These figures do not include elements of future incomes or costs.

Group

Jun-2013

Carrying Less than 3 to 6 6 to 12 1 to 5 More than

In thousands of Nigerian Naira Note amount 3 months1months months years 5 years

Financial assets

Cash and cash equivalents 23 232,414,899 219,078,750 6,794,401 4,515,709 1,240,174 785,865

Loans and advances to banks 24 4,143,418 3,296,943 835,851 4,374 6,250 -

Loans and advances to customers 25 894,862,976 383,217,116 69,877,507 88,411,236 324,229,772 29,127,345

Financial assets held for trading 26 31,066,348 4,406,281 6,348,527 11,650,245 5,543,668 3,117,627


– Available for sale 27 296,801,242 44,491,038 137,370,612 103,089,183 4,979,420 6,870,989

– Held to maturity 27 120,598,110 34,052,299 4,311,238 36,892,294 45,342,279 -

Assets pledged as collateral 28 27,529,108 22,553,853 4,975,255 - - -

Other assets233 162,176,436 120,759,121 6,944,973 5,287,615 23,891,926 5,292,801

1,769,592,537 831,855,401 237,458,364 249,850,656 405,233,489 45,194,627


Deposits from banks 35 17,657,973 14,839,014 2,818,844 115 - -

Deposits from customers 36 1,254,445,308 1,221,678,480 16,855,866 11,216,533 4,688,281 6,148

Debt securities issued 37 94,007,480 - 63,726 - 93,943,754 -

Other borrowed funds 40 90,191,530 1,851,914 4,527,539 6,893,325 43,217,484 33,701,268

Other liabilities 38 89,462,161 26,109,947 50,347,359 2,644,106 10,204,413 156,336

1,545,764,452 1,264,479,355 74,613,334 20,754,079 152,053,932 33,863,752


Cumulative liquidity gap (432,623,954) (269,778,924) (40,682,347) 212,497,210 223,828,085

1 Includes balances with no specific contractual maturities2 Excludes prepayments

The following table shows the contractual maturities at period end of the Group’s financial assets and liabilities and represents actual and in some cases assumed

129



Residual contractual maturities of contingencies

The table below shows the contractual expiry by maturity of the Group's contingent liabilities and commitments. The maximum amount of the contingencies is allocated

to the earliest period in which the contingencies could be called.

Group

Jun-2013


In thousands of Nigerian Naira amount 3 months1months months years 5 years

Transaction related bonds and guarantees 45 393,884,665 35,334,316 38,003,032 35,005,190 60,462,109 225,080,018

Guaranteed facilities 45 95,314,857 56,778,023 29,677,334 8,859,500 - -

Short term foreign currency related

transactions 45 60,246,815 60,246,815 - - - -

Clean line facilities and letters of

credit 45 91,347,731 51,915,394 38,863,309 569,028 - -

Other commitments 45 961,577 533,997 311,201 116,379 - -

641,755,645 204,808,545 106,854,876 44,550,097 60,462,109 225,080,018


130



Residual contractual maturities of financial assets and liabilities

Group

Dec-2012

Financial assets


In thousands of Nigerian Naira Note amount 3 months1

months months years 5 years


Loans and advances to banks 24 4,864,824 3,792,517 1,047,291 25,016 - -


Financial assets held for trading 26 271,073,896 202,347,680 59,707,699 8,963,685 7,486 47,346


– Available for sale 27 15,765,789 1,488,871 839,124 2,512,476 6,054,824 4,870,494

– Held to maturity 27 129,490,810 32,390,770 18,890,217 37,068,393 37,294,140 3,847,290


Other assets233 102,889,644 95,862,856 1,250,358 1,056,998 852,191 3,867,241

1,657,327,691 999,429,858 128,127,284 91,238,813 322,077,361 116,454,375



Deposits from customers 36 1,148,197,165 1,118,117,912 15,746,774 9,956,212 4,376,267 -



Other liabilities 38 80,972,096 29,592,949 13,272,310 2,107,237 35,999,600 -

1,432,517,571 1,171,953,173 35,742,161 16,866,713 162,972,513 44,983,011



1 Includes balances with no specific contractual maturities2 Excludes prepayments

131




The table below shows the contractual expiry by maturity of the Group's contingent liabilities and commitments. The maximum amount of the contingencies is allocated


Group

Dec-2012



Acceptances and guaranteed commercial

papers 45 83,847 83,847 - - - -


Guaranteed facilities 45 64,123,627 41,821,782 14,100,017 8,201,828 - - Short term foreign currency related

transactions 45 21,056,857 21,056,857 - - - -

Clean line facilities and letters of credit 45 77,094,340 39,388,311 37,409,161 296,868 - -

Other commitments 45 1,167,439 1,167,439 - - - -

527,453,161 154,342,045 74,249,063 52,404,687 51,296,545 195,160,821


132




obligation expected for the assets or liability to be recovered or settled. These figures do not include elements of future incomes or costs.

Parent

Jun-2013



Financial assets

Cash and cash equivalents 23 180,356,202 172,888,469 4,210,186 3,257,547 - -

Loans and advances to banks 24 32,498 13,749 8,125 4,374 6,250 -


Financial assets held for trading 26 27,358,077 4,406,284 5,730,827 8,559,671 5,543,668 3,117,627



– Held to maturity 27 101,692,526 28,246,465 - 30,970,051 42,476,010 -


Other assets233 160,742,908 123,012,548 5,848,403 3,913,949 23,295,380 4,672,628

1,634,894,758 766,969,965 220,822,849 228,098,317 379,040,805 39,962,822


Deposits from banks 35 1,430,966 1,430,966 - - - -

Deposits from customers 36 1,158,421,656 1,154,423,267 3,872,646 125,743 - -



Other liabilities 38 77,054,502 24,416,351 49,191,913 218,090 3,071,812 156,336

1,420,015,300 1,181,919,914 57,456,673 6,768,058 141,488,500 32,382,155




2 Excludes prepayments

The following table shows the contractual maturities at period end of the Bank’s financial assets and liabilities and represents actual and in some cases assumed

133




The table below shows the contractual expiry by maturity of the Bank's contingent liabilities and commitments. The maximum amount of the contingencies is allocated


Parent

Jun-2013



Transaction related bonds and

guarantees 45 385,272,985 28,923,708 36,313,412 34,564,458 60,462,109 225,009,298

Guaranteed facilities 45 95,314,857 56,778,023 29,677,334 8,859,500 - -

Short term foreign currency related

transactions 45 60,246,815 60,246,815 - - - -

Clean line facilities and letters of

credit 45 66,948,768 32,127,887 34,251,853 569,028 - -

607,783,425 178,076,433 100,242,599 43,992,986 60,462,109 225,009,298


134




Parent

Dec-2012

Financial assets



Cash and cash equivalents 23 256,433,560 220,312,951 9,035,753 1,282,283 25,802,573 -

Loans and advances to banks 24 177,985 143,050 9,919 25,016 - -




– Available for sale 27 10,138,761 - - - 5,272,897 4,865,864

– Held to maturity 27 118,897,917 25,610,968 14,370,282 37,068,393 38,635,978 3,212,296


Other assets233 101,660,574 96,327,738 639,336 45,017 781,242 3,867,241

1,528,366,153 920,010,232 116,242,117 74,497,736 305,313,205 112,302,863



Deposits from customers 36 1,054,122,573 1,046,995,431 6,901,816 124,384 100,942 -




1,313,598,059 1,083,843,717 23,885,363 5,753,395 156,658,120 43,457,464




135




The table below shows the contractual expiry by maturity of the Bank's contingent liabilities and commitments. The maximum amount of the contingencies is allocated


Parent

Dec-2012




Guaranteed facilities 45 64,055,852 42,185,750 13,822,049 8,048,053 - - Short term foreign currency related

transactions 45 21,056,857 21,056,857 - - - -

Clean line facilities and letters of credit 45 54,726,233 21,964,826 32,464,539 296,868 - -

494,971,127 132,274,441 67,282,076 50,965,613 49,367,709 195,081,288


136



Repricing period of financial assets and liabilities

The table below analyses the Group’s interest rate risk exposure on financial assets and liabilities. The Group’s assets and liabilities are included at carrying

amount and categorised by the earlier of contractual re–pricing or maturity dates.

Group

Jun-2013

Carrying Less than 3-6 6-12 1-5 More than

In thousands of Nigerian Naira Note amount 3 months months months years 5 years

Cash and cash equivalents 23 232,414,899 218,628,712 6,794,401 5,350,477 855,444 785,865

Loans and advances to banks 24 4,143,418 4,143,418 - - - -


Financial assets held for trading 26 31,066,348 4,406,282 6,411,256 11,587,515 8,661,295 -



– Held to maturity 27 120,598,110 34,052,299 4,311,238 36,892,294 45,342,279 -


Other assets133 162,176,436 120,907,649 6,944,973 5,287,615 23,743,398 5,292,801

1,769,592,537 1,276,466,943 169,542,441 170,486,288 109,255,694 43,841,171





Other liabilities 38 89,462,161 26,161,834 50,346,867 2,592,711 10,204,413 156,336

1,545,764,452 1,266,819,171 73,800,362 20,702,684 152,060,080 32,382,155

223,828,085 9,647,772 95,742,079 149,783,604 (42,804,386) 11,459,016


137




The table below analyses the Group’s interest rate risk exposure on financial assets and liabilities. The Group’s assets and liabilities are included at carrying


Group

Dec-2012




Loans and advances to banks 24 4,864,824 4,864,824 - - - -




– Available for sale 27 15,765,789 3,425,808 481,129 933,534 6,054,824 4,870,494

– Held to maturity 27 129,490,810 32,390,770 18,890,217 37,068,393 37,294,140 3,847,290


Other assets133 102,889,644 96,010,579 1,250,358 909,275 852,191 3,867,241

1,657,327,691 1,350,753,352 110,766,176 59,098,699 91,412,634 45,296,830






1,432,517,571 1,173,557,032 35,742,161 16,788,401 162,972,513 43,457,464

224,810,120 177,196,320 75,024,015 42,310,298 (71,559,879) 1,839,366


138




The table below analyses the Bank’s interest rate risk exposure on financial assets and liabilities. The Bank’s assets and liabilities are included at carrying


Parent

Jun-2013



Cash and cash equivalents 23 180,356,202 172,888,469 4,210,186 3,257,547 - -

Loans and advances to banks 24 32,498 32,498 - - - -

Loans and advances to customers 25 848,309,592 811,249,208 - - 6,168,868 30,891,516

Financial assets held for trading 26 27,358,077 4,406,284 5,730,827 8,559,671 8,661,295 -



– Held to maturity 27 101,692,526 28,246,465 - 30,970,051 42,476,010 -


Other assets133 160,742,908 123,012,548 5,848,403 3,913,949 23,295,380 4,672,628

1,634,894,758 1,203,981,032 153,823,699 149,255,791 85,403,951 42,430,285


Deposits from customers 36 1,158,421,656 1,154,423,268 3,872,646 125,742 - -




1,420,015,300 1,181,919,914 57,456,673 6,768,058 141,488,500 32,382,155

214,879,458 22,061,118 96,367,026 142,487,733 (56,084,549) 10,048,130


139




The table below analyses the Bank’s interest rate risk exposure on financial assets and liabilities. The Bank’s assets and liabilities are included at carrying


Parent

Dec-2012



Cash and cash equivalents 23 256,433,560 220,312,951 9,035,753 1,282,283 25,802,573 -


Loans and advances to customers 25 742,436,944 703,395,437 - - 6,787,244 32,254,263



– Available for sale 27 10,138,761 - - - 5,272,897 4,865,864

– Held to maturity 27 118,897,917 25,610,968 14,370,282 37,068,393 38,635,978 3,212,296


Other assets133 101,660,574 96,327,738 639,336 45,017 781,242 3,867,241

1,528,366,153 1,262,038,314 100,419,777 44,373,632 77,287,420 44,247,010


Deposits from customers 36 1,054,122,573 1,046,995,432 6,901,816 124,384 100,941 -




1,313,598,059 1,083,843,717 23,885,363 5,753,395 156,658,120 43,457,464

214,768,094 178,194,597 76,534,414 38,620,237 (79,370,700) 789,546


140


141

Exposure to other market risks – non-trading portfolios (continued) The management of interest rate risk against interest rate gap limits is supplemented by monitoring the sensitivity of the Group’s financial assets and liabilities to various scenarios. Credit spread risk (not relating to changes in the obligor / issuer’s credit standing) on debt securities held by the Group and equity price risk is subject to regular monitoring by Group Management Risk committee, but is not currently significant in relation to the overall results and financial position of the Group. Interest rate movement affect reported equity in the following ways: • Retained earnings arising from increase or decrease in net interest income and the fair value

changes reported in profit or loss. • Fair value reserves arising from increases or decreases in fair value of available-for-sale

financial instruments reported directly in other comprehensive income. Overall non-trading interest rate risk positions are managed by Treasury, which uses investment securities, advances to banks and deposits from banks to manage the overall position arising from the Group’s non- trading activities. At 30 June, 2013, if interest rates on: • floating rate assets and liabilities held at amortised cost; and Assets and liabilities accounted at fair

value through profit or loss had increased or decreased by 100 basis points (December 2012 – 100 basis points) with all other variables held constant, the impact on profit or loss would have been as set out in the table on page 140:

In arriving at the 100 basis point used for the sensitivity analysis of interest rate, the fluctuation in the interest rate of the Group’s major assets and liabilities were considered as shown below: • The prime lending rate on loans and advances ranged between 16.57% and 16.66% over the period, a

change of about 100 basis points.

• The discount rate on various maturities of treasury bills ranged between 9.9% and 11.17% over the financial period as published by Central Bank of Nigeria (CBN). This represents a variability of about 100 basis points in the observed discount rates for the year.

• A 100 basis point proportional change in the cost of fund was also assumed.


142

Interest Rate sensitivity

Group

Jun-2013 Jun-2013 Jun-2012 Jun-2012

In thousands of Nigerian Naira Pre-tax Post-tax Pre-tax Post-tax

Decrease (3,641,597) (3,111,548) (3,662,871) (3,069,185) Increase 3,641,597 3,111,548 3,662,871 3,069,185

Parent

Jun-2013 Jun-2013 Jun-2012 Jun-2012


Decrease (1,862,884) (1,612,170) (3,380,368) (2,859,615) Increase 1,862,884 1,612,170 3,380,368 2,859,615 Bond price sensitivity The Group carried out the following in determining sensitivity of the Group's profit to fluctuations in market prices of bond: • Daily bond prices were obtained and trended for the different series of Bonds in issue as at the reporting date. • A reasonably possible change of ± 1 naira was determined based on the distribution of one year daily change in bond prices. The graph below indicates that large proportion of changes in price falls in the range of ± 1 naira. • The chosen reasonable change in market prices was then applied to the bank's holding of trading bonds as at end of the year.

As at 30 June 2013, if price of bonds designated as financial assets held for trading increased or decreased by one

0

10

20

30

40

50

60

70

-2.17 -0.9 -0.48 -0.05 0.37 0.79 2.06 4.18

Freq

uenc

y of

pric

e ch

ange

(da

ys)

Price change (Naira)

Fluctuation in bond market prices (in naira)


143

naira with all other variables held constant, the impact on mark-to-market profit or loss would have been as set out in the tables below: Group

In thousands of Nigerian Naira Jun-2013 Jun-2013 Jun-2012 Jun-2012 Pre-tax Post-tax Pre-tax Post-tax

Decrease (6,837) (5,845) (19,860) (16,801) Increase 6,837 5,845 19,860 16,801 Parent


Decrease (6,837) (5,917) (19,860) (16,801) Increase 6,837 5,917 19,860 16,801 Treasury bills discount rate sensitivity

The Group carried out the following in determining sensitivity of the Group's profit to fluctuations in market prices of treasury bills:

• Daily market discount rates were obtained and trended for the different maturities of treasury bills in issue as at the reporting date.

• A reasonably possible change of ± 50 basis points was determined based on the distribution of one year daily change in discount rates on treasury bills. The graph below indicates that large proportion of changes in discount rates falls in the range of ± 50 basis points.

• The chosen reasonable change in market discount rates was then applied to the bank's holding of Trading bills


144

At 30 June 2013, if discount rates on treasury bills increased or reduced by 50 basis points with all other variables held constant, the impact on mark-to-market profit or loss would have been as set out in the tables below:

Group In thousands of Nigerian

Naira Jun-2013 Jun-2013 Jun-2012 Jun-2012 Pre-tax Post-tax Pre-tax Post-tax

Decrease 21,230 18,151 481,075 406,965 Increase (21,230) (18,151) (481,075) (406,965)

Parent


Decrease 21,230 18,373 481,075 406,965 Increase (21,230) (18,373) (481,075) (406,965)

Financial Instrument fair value through equity - Other Comprehensive Income (OCI)

The Group recognised fair value changes for AFS Bonds, Bills and Equities as at June 30, 2013 and the comparative period in 2012. The Group carried out the following in determining sensitivity of the Group's Other comprehensive income to fluctuations in market prices of the financial assets:

• Daily bond prices were obtained and trended

• A reasonably possible change of ± 1 naira was determined based on the distribution of one year daily change in market prices. The results were that fluctuations were in the range of ± 1 naira .

0

10

20

30

40

50

-0.86 -0.58 -0.44 -0.3 -0.16 -0.02 0.12 0.26 0.54 0.82 1.1 1.24 Freq

uenc

y of

D.R

. ch

ange

( da

ys)

Discount rate (D.R.) change (Basis points)

Fluctuation in market discount rates of treasury bills (in basis points)


145

At 30 June 2013, if price of available for sale bond (AFS) increased or decreased by one naira with all other variables held constant, the impact on Other Comprehensive Income would have been as set out in the table below:

Group In thousands of Nigerian

Naira Jun - 2013 Jun - 2013 Jun - 2012 Jun - 2012 Pre-tax Post-tax Pre-tax Post-tax

Decrease (50,500) (43,175) - - Increase 50,500 43,175 - -

Parent

In thousands of Nigerian Naira Jun - 2013 Jun - 2013 Jun - 2012 Jun - 2012 Pre-tax Post-tax Pre-tax Post-tax


Available for Sale Treasury Bills to be fair valued through equity - Other Comprehensive Income (OCI)

The Group carried out the following in determining sensitivity of the Group's profit to fluctuations in market prices of treasury bills:

• Daily market discount rates were obtained and trended for the different maturities of treasury bills in issue as at the reporting date.

• A reasonably possible change of ± 50 basis points was determined based on the distribution of one year daily change in discount rates on treasury bills. The graph below indicates that large proportion of changes in discount rates falls in the range of ± 50 basis points.

• The chosen reasonable change in market discount rates was then applied to the bank's holding of Trading treasury bills as at end of the year.

At 30 June 2013, if discount rates on treasury bills increased or reduced by 50 basis points with all other variables held constant, the impact on mark-to-market profit or loss would have been as set out in the tables below:


146

Group In thousands of Nigerian Naira Jun-2013 Jun-2013 Jun-2012 Jun-2012

Pre-tax Post-tax Pre-tax Post-tax

Decrease 578,836 494,873 - - Increase (578,836) (494,873) - -

Parent


Decrease 578,836 500,934 - - Increase (578,836) (500,934) - -

Equity Instruments with readily determinable fair value

At June 30 2013, if the parameters used in determining the fair value of equity instruments were increased or decreased by 100 basis point, with all other variables held constant, the impact on the Other Comprehensive Income would have been as set out in the table below:




Parent




147

Exposure to foreign currency risk

The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the US dollar and UK pound. Foreign exchange risk represents exposures to changes in the values of current holdings and future cash flows denominated in other currencies. The types of instruments exposed to this risk include investments in foreign subsidiaries, foreign currency-denominated loans and securities, future cash flows in foreign currencies arising from foreign exchange transactions, foreign currency denominated debt and various foreign exchange fluctuate with changes in the level or volatility of currency exchange rates or foreign interest rates. The Group deploys foreign derivative instruments whose values currency debts to foreign currency loans and advances to eliminate exchange exposures on such borrowings.

Foreign exchange profit or loss (Dollars)

The Group carried out the following in determining sensitivity of the Group's profit to fluctuations in exchange rate of dollars:

• Daily dollar exchange rates were obtained and trended

• A reasonably possible change of ± 1 naira was determined based on the distribution of two year daily change in exchange rates. The graph below indicates that large proportion of changes in price falls in the range of ± 1 naira.

• The chosen reasonable change in exchange rates was then applied to the bank's dollar position as at end of the year.

0

20

40

60

80

100

120

140

160

-2.56 -2.16 -1.36 -0.96 -0.56 -0.16 0.24 0.64 1.04 1.44

Freq

uenc

y of

E.R

. cha

nge

(day

s)

Fluctuation in dollar exchange rates (in naira)


148

At 30 June 2013, if the Naira had weakened/strengthened by one naira against the Dollar with all other variables held constant the pre-tax and post-tax profit for the period would have increased/(decreased) as set out in the table below mainly as a result of foreign exchange gains or losses on the translation

Group

Jun-2013 Jun-2013 Jun-2012 Jun-2012


Decrease (410,657) (350,884) (331,368) (280,334) Increase 410,657 350,884 331,368 280,334

Parent In thousands of Nigerian Naira Jun-2013 Jun-2013 Jun-2012 Jun-2012



Foreign exchange profit or loss (Pounds)

The Group carried out the following in determining sensitivity of the Group's profit to fluctuations in exchange rate of pounds:

• Daily pound exchange rates were obtained and trended

• A reasonably possible change of ± 2 naira was determined based on the distribution of two year daily change in exchange rates. The graph below indicates that large proportion of changes in price falls in the range of ± 2 naira .


0

10

20

30

40

50

60

70

80

90

-4.68 -3.08 -2.28 -1.48 -0.68 0.12 0.92 1.72 2.52 3.32 4.12

Freq

uenc

y of

E.R

. cha

nge

(day

s)

Fluctuation in Pounds exchange rates (in naira)


149

At 30 June 2013, if the Naira had weakened/strengthened by two naira against the Pounds with all other variables held constant the pre-tax and post-tax profit for the period would have increased/(decreased) as set out in the table below mainly as a result of foreign exchange gains or losses on the translation







Foreign exchange profit or loss (Euros)

The Group carried out the following in determining sensitivity of the Group's profit to fluctuations in exchange rate of pounds:

• Daily Euros exchange rates were obtained and trended

• A reasonably possible change of ± 2 naira was determined based on the distribution of two year daily change in exchange rates. The graph below indicates that large proportion of changes in price falls in the range of ± 2 naira .


0

20

40

60

80

100

120

-5.9 -5 -3.2 -2.3 -1.4 -0.5 0.4 1.3 2.2 3.1

Freq

uenc

y of

E.R

. cha

nge

(day

s)

Fluctuation in Euro exchange rates (in naira)


150

At 30 June 2013, if the Naira had weakened/strengthened by two naira against the Euros with all other variables held constant the pre-tax and post-tax profit for the period would have increased/(decreased) as set out in the table below mainly as a result of foreign exchange gains or losses on the translation

Group






Foreign exchange profit or loss (Other currencies)

At 30 June 2013, if similar assumptions as above are made for all other currencies, the impact of possible fluctuations in exchange rates on the overall foreign exchange revaluation profit of the bank is as shown below:

Group








The table below summaries the Group’s financial assets and financial liabilities at carrying amount, categorised by currency:

Group

Jun-2013

Financial instruments by currency

In thousands of Nigerian Naira Total Naira USD GBP Euro Others

Note

Cash and cash equivalents 23 232,414,899 42,015,840 145,749,705 20,787,714 10,762,173 13,099,467

Loans and advances to banks 24 4,143,418 32,498 3,954,308 - 86,806 69,806

Loans and advances to customers 25 894,862,976 556,972,230 302,800,161 9,969,336 523,497 24,597,752

Financial assets held for trading 26 31,066,348 27,358,077 - - - 3,708,271


– Available for sale 27 296,801,242 288,873,847 2,350,143 1,597,173 210,743 3,769,336

– Held to maturity 27 120,598,110 101,692,526 6,446,736 2,654,528 48,561 9,755,759

Assets pledged as collateral 28 27,529,108 27,529,108 - - - -

Other assets233 162,176,436 120,601,564 29,233,487 361,913 6,154,264 5,825,208

1,769,592,537 1,165,075,690 490,534,540 35,370,664 17,786,044 60,825,599

Deposits from banks 35 17,657,973 1,430,966 11,153,741 519,112 1,471,268 3,082,886

Deposits from customers 36 1,254,445,308 941,202,160 234,570,669 22,535,238 11,781,839 44,355,402

Debt securities issued 37 94,007,480 13,228,726 80,778,754 - - -

Other borrowed funds 40 90,191,530 40,324,236 48,072,027 1,475,448 - 319,819

Other liabilities 38 89,462,161 31,826,223 45,737,974 493,443 6,203,604 5,200,917

1,545,764,452 1,028,012,311 420,313,165 25,023,241 19,456,711 52,959,024


151



Group

Dec-2012



Note

Cash and cash equivalents 23 322,989,480 71,962,799 204,514,307 18,230,943 14,705,792 13,575,639

Loans and advances to banks 24 4,864,824 177,985 4,434,869 - 251,970 -

Loans and advances to customers 25 779,050,018 519,212,058 235,369,556 8,470,477 407,029 15,590,898

Financial assets held for trading 26 271,073,896 271,073,896 - - - -


– Available for sale 27 15,765,789 13,442,895 943,238 1,271,289 103,737 4,630

– Held to maturity 27 129,490,810 114,967,869 515,125 46,530 48,362 13,912,924


Other assets233 102,889,644 101,185,052 1,021,056 208,989 7,373 467,174

1,657,327,691 1,123,225,784 446,798,151 28,228,228 15,524,263 43,551,265

Deposits from banks 35 23,860,259 7,171,082 11,841,924 664,630 740,399 3,442,224

Deposits from customers 36 1,148,197,165 880,943,486 214,960,540 18,847,031 6,983,475 26,462,633

Debt securities issued 37 86,926,227 13,238,291 73,687,936 - - -

Other borrowed funds 40 92,561,824 42,741,765 48,294,512 1,525,547 - -


1,432,517,571 968,834,344 396,732,947 21,526,743 14,787,277 30,636,260


152



Parent

Jun-2013



Note



Loans and advances to customers 25 848,309,592 556,972,230 291,329,825 6,296 1,191 50



– Available for sale 27 288,873,847 288,873,847 - - - -

– Held to maturity 27 101,692,526 101,692,526 - - - -


Other assets233 160,742,908 120,986,520 31,712,755 87,972 6,153,100 1,802,561

1,634,894,758 1,165,390,341 440,242,058 13,029,474 14,232,537 2,000,348


Deposits from customers 36 1,158,421,656 941,202,160 200,437,482 10,953,631 5,827,208 1,175

Debt securities issued 37 13,228,726 13,228,726 - - - -

Other borrowed funds 40 169,879,450 38,916,905 130,962,545 - - -

Other liabilities 38 77,054,502 25,085,080 43,855,859 106,337 6,203,604 1,803,622

1,420,015,300 1,019,863,837 375,255,886 11,059,968 12,030,812 1,804,797


153



Parent

Dec-2012



Note



Loans and advances to customers 25 742,436,944 514,831,523 227,598,144 6,120 1,107 50



– Available for sale 27 10,138,761 10,138,761 - - - -

– Held to maturity 27 118,897,917 114,967,869 3,930,048 - - -


Other assets233 101,660,574 100,763,352 897,222 - - -

1,528,366,153 1,109,364,894 396,922,200 8,967,020 12,909,021 203,018


Deposits from customers 36 1,054,122,573 867,981,044 171,466,468 9,233,031 5,439,312 2,718

Debt securities issued 37 13,238,291 13,238,291 - - - -

Other borrowed funds 40 169,194,418 41,154,048 128,040,370 - - -

Other liabilities 38 69,872,456 16,575,731 45,953,159 286,796 7,056,770 -

1,313,598,059 946,119,435 345,459,997 9,519,827 12,496,082 2,718


154


155

5. Capital management and Other Risks

Regulatory capital The Group’s lead regulator, the Central Bank of Nigeria, sets and monitors capital requirements for the Bank. The parent company and individual banking operations are directly supervised by the Central Bank of Nigeria and the respective regulatory authorities in the countries in which the subsidiary banking operations are domiciled. Other subsidiaries are supervised by relevant regulatory authorities in their jurisdictions. In implementing current capital requirements, Central Bank of Nigeria requires the Bank to maintain a prescribed ratio of total capital to total risk-weighted assets. The Bank’s regulatory capital is analysed into two tiers: Tier 1 capital, which includes ordinary share capital, share premium, retained earnings, translation reserve and non-controlling interests after deductions for goodwill and intangible assets, and other regulatory adjustments relating to items that are included in equity but are treated differently for capital adequacy purposes. The Bank and its individually regulated operations have complied with all externally imposed capital requirements throughout the period. There have been no material changes in the Bank’s management of capital during the year. Capital adequacy ratio The capital adequacy ratio is the quotient of the capital base of the Group and the Group’s risk weighted asset base. In accordance with Central Bank of Nigeria regulations, a minimum ratio of 15% is to be maintained for international banks.

Operational risk Guaranty Trust Bank defines Operational Risk Management (OpRisk) as “the direct/indirect risk of loss resulting from inadequate and/or failed internal process, people, and systems or from external events”. This definition requires the review and monitoring of all strategies and initiatives deployed in its people management, process engineering and re-engineering, technology investment and deployment, management of all regulatory responsibilities and response to external threats. To ensure a holistic framework is implemented, Operational Risk Management also monitors Strategic and Reputational Risks from a broad perspective. The following practices, tools and methodologies have been implemented for this purpose: • Loss Incident Reporting – An in-house developed web-based Loss Incident Reporting System is

deployed via the Bank’s intranet for logging of operational risk incidents bank-wide. All staff members are encouraged to report operational risk incidents that occurred within their work


156

spaces whether it crystallized to actual losses or not. As a result, Guaranty Trust Bank Plc has collated OpRisk loss data for four years. Information gathered is used to identify risk concentrations and for appropriate operational risk capital calculation.

• Risk and Control Self Assessments (RCSAs) – This is a qualitative risk identification tool deployed bank-wide. All branches and Head-Office departments are required to complete at least once a year. A risk-based approach has been adopted for the frequency of RCSAs to be conducted by branches, departments, groups and divisions of the Bank. These assessments enable risk profiling and risk mapping of prevalent operational risks.

Risk Assessments of the Bank’s new and existing products / services are also carried out. This process also tests the quality of controls the Bank has in place to mitigate likely risks; a detailed risk register cataloguing key risks identified and controls for implementation is also developed and maintained from this process.

Other Risk Assessments conducted include Process Risk Assessments, Vendor Risk Assessments, and Fraud Risk Assessments.

Key Risk Indicators (KRI) – These are quantitative parameters defined for the purpose of monitoring operational risk trends across the Bank. A comprehensive KRI Dashboard is in place supported by specific KRIs for key departments in the Bank. Medium – High risk trends are reported in the Monthly Operational Risk Status reports circulated to Management and key stakeholders.

• Fraud Risk Management Initiatives – Causal analysis of key fraud and forgeries trends identified in the Bank or prevalent in local and global business environments are carried out and reported on a monthly basis. Likely and unlikely loss estimations are also determined in the process as input in the OpRisk capital calculation process. The focus in Fraud Risk Management is to ensure that processes for preventing, deterring, detecting fraud and forgeries incidents, and sanctioning offenders are effective.

• Business Continuity Management (BCM) in line with BS 25999 Standards – To ensure the

resilience of our business to any disruptive eventuality, the Bank has in place a robust Business Continuity Plan (BCP) which assures timely resumption of its business with minimal financial losses or reputational damage and continuity of service to its customers, vendors and regulators. Desktop Walkthrough Tests are being conducted bank-wide to ensure that recovery co-ordinators are aware of their roles and responsibilities. This plan is reviewed monthly and when necessary, it is updated to ensure reliability and relevance of information contained.

Plans are underway for the Bank to be certified by globally recognised Business Continuity standards organizations.


157

• Information Risk Management Awareness and Monitoring – Strategies for ensuring the Confidentiality, Availability and Integrity of all the Bank’s information assets (hardware, software, documents, backup media, etc.) are continuously reviewed and key risks identified reported to key stakeholders. Where applicable, implementation of controls by relevant stakeholders is also tracked and reported on.

• Compliance and Legal Risk Management – Compliance Risk Management involves close monitoring of KYC compliance by the Bank, escalation of Audit Non-conformances, Complaints Management, and observance of the Bank’s zero-tolerance culture for regulatory breaches. It also entails an oversight role for monitoring adherence to regulatory guidelines and global best practices on an on-going basis.

Legal Risk Management involves the monitoring of litigations against the Bank to ascertain likely financial or non-financial loss exposures. It also involves conduct of causal analysis on identified points of failure that occasioned these litigations. Medium – High risk factors identified are duly reported and escalated for appropriate treatment where necessary.

• Occupational Health and Safety procedures and initiatives – Global best practices for ensuring the health and safety of all staff, customers and visitors to the Bank’s premises are advised, reported on to relevant stakeholders and monitored for implementation. As a result, the following are conducted and monitored: Fire Risk Assessments, Quarterly Fire Drills, Burglaries and Injuries that occur within the Bank’s premises.

• Operational Risk Capital Calculation – The Bank has adopted the Basel II Pillar 1 defined “Standardized Approach” for the calculation of its Operational Risk Economic Capital for internal risk monitoring and decision-making. Strategies for migrating to the Advanced Measurement Approach once the required gestation period and data collation requirement are in place is on-going. Whilst it is not a regulatory requirement to have capital set aside for operational risk, these estimations are determined to guide Financial Control in its Capital Planning, and Management in its decision making process.

• Operational Risk Reporting – Monthly, quarterly, and annual reports highlighting key operational risks identified are circulated to relevant stakeholders for awareness and timely implementation of mitigation strategies. Reports are also generated and circulated on a need-basis.


158

Operational Risk Management Philosophy and Principles

Governance Structure

• The Board through its Board Risk Committee (BRC) oversees the operational risk function in the Bank. It ensures that the OpRisk policy is robust and provides a framework on the Bank’s OpRisk profile and limits. It also determines the adequacy and completeness of the Bank’s risk detection, and measurement systems, assesses the adequacy of risk mitigants, reviews and approves contingency plans for Specific Risks and lays down the principles on how operational risk incidents are to be identified, assessed, controlled, monitored and measured. The BRC reviews OpRisk Reports on a quarterly basis.

• The Management Risk Committee monitors the activities of OpRisk and approves key decisions made before presentation to the Board. It ensures the implementation of the guiding OpRisk framework bank-wide, and ensures that all departments in the Bank are fully aware of the risks embedded in respective process flows and business activities.

• All process owners are responsible for the day-to-day management of OpRisks prevalent in

respective departments, Groups, Divisions and Regions of the Bank.

• The Internal Audit function conducts independent reviews on the implementation of OpRisk Policies and Procedures bank-wide.

Approach to Managing OpRisk

• Guaranty Trust Bank adopts operational risk procedures and practices that are “fit for purpose” and will increase the efficiency and effectiveness of the bank's resources, minimise losses and utilize opportunities.

• This outlook embeds OpRisk practices in the bank's day-to-day business activities.

• It also aligns with the Bank's Operational Risk Management framework with sound practices recommended by various local and globally-accepted regulatory agencies such as Basel II Accord's "Sound Practices for the Management and Supervision of Operational Risk", Committee of Sponsoring Organisations (COSO) / Sarbanes-Oxley (SOX) standards, and some internationally accepted British Standards such as the BS 25999 for Business Continuity Management.

Principles

• Operational risks inherent in all products, activities, processes and systems are assessed periodically for timely identification of new risks and trending of prevalent risks. The Bank ensures that before any new products, processes, activities and systems are introduced or undertaken, the operational risks inherent are assessed and likely risks mitigated.


159

• In accordance with this, the Bank ensures regular monitoring of its operational risk profile and material exposure to losses.

• Pertinent information is reported regularly to Senior Management and the Board to ensure proactive management of operational risk bankwide.

• In addition to this, the Bank’s Business Continuity Plan outlines the Bank’s requirements for

contingency and business continuity plans to ensure its ability to operate on an ongoing basis and limit losses in the event of severe business disruption.

Treatment of Operational Risks

• The OpRisk identification and assessment process provides a guide on the decision-making process for the extent and nature of risk treatment to be employed by the Bank. In line with best practices, the cost of risk treatments introduced must not exceed the reward.

• The following comprise the OpRisk treatments adopted by the Bank: - Risk Acceptance and Reduction: The Bank accepts the risk because the reward of engaging

in the business activity far outweighs the cost of mitigating the risk. Residual risks retained by the business after deploying suitable mitigants are accepted

- Risk Transfer (Insurance): This involves another party or parties bearing the risk, by mutual consent. Relationships are guided by the use of contracts and insurance arrangements

- Risk Sharing (Outsourcing): Risk is shared with other parties that provide expert solutions required to mitigate risk or reduce risk burden whether operationally or financially

- Risk Avoidance: Requires discontinuance of the business activity that gives rise to the risk

Strategy Risk Management

Strategic Risk Management is the process for identifying, assessing and managing risks and uncertainties, affected by internal and external events or scenarios, that could inhibit the Bank’s ability to achieve its strategy and strategic objectives with the ultimate goal of creating and protecting shareholder and stakeholder value. In Guaranty Trust Bank, it is also regarded as the possibility that the Bank’s strategy may be inappropriate to support its long-term corporate goals due to the inadequacy of its strategic planning and/or decision-making process or the inadequate implementation of such strategies. This could include the risk that the strategy is unclear, clear but not viable or clear and viable but badly implemented, or strategy failure due to unexpected circumstances. A specialized template for monitoring Strategic Risk has been developed for tracking key activities designed or defined by the Bank to achieve its strategic intent in the short, medium and long term.


160

Reputational Risk Management Guaranty Trust Bank considers Reputational Risk to be the current and prospective adverse impact on earnings and capital arising from negative public opinion. It measures the change in perception of the Bank by its stakeholders. It is linked with customers’ expectations regarding the Bank’s ability to conduct business securely and responsibly.

A detailed template with internal and external factors that might impact the Bank adversely is used to monitor the Bank’s exposure to reputational risk. All adverse trends identified are reported to relevant stakeholders for timely redress.



Capital adequacy ratio

Group

In thousands of Nigerian Naira Note Jun-2013 Dec-2012

Tier 1 capital

Ordinary share capital 41 14,715,590 14,715,590

Share premium 41 123,471,114 123,471,114

Retained earnings 41 34,403,282 41,380,776

Treasury shares 41 (2,046,714) (2,046,714)

Other reserves 41 125,159,807 104,651,663

Non-controlling interests 41 1,246,302 1,268,691

Shareholders’ funds 296,949,381 283,441,120

Add/(Less):

Fair value reserve for available-for- sale securities 41 (2,304,539) (169,607)

Intangible assets 31 (2,403,549) (1,772,176)

Shareholders’ funds 292,241,293 281,499,337

Tier 2 capital

Fair value reserve for available-for-

sale securities 2,304,539 169,607

Collective allowances for impairment 24, 25 6,059,162 3,448,851

Total 8,363,701 3,618,458

Total regulatory capital 300,604,994 285,117,795

Risk-weighted assets 1,396,006,811 1,176,805,668

Capital ratios

Total regulatory capital expressed as a percentage

of total risk-weighted assets 21.5% 24.2%

Total tier 1 capital expressed as a percentage of

risk-weighted assets 20.9% 23.9%

161


162

Capital allocation The allocation of capital between specific operations and activities is, to a large extent, driven by optimization of the return achieved on the capital allocated. The amount of capital allocated to each operation or activity is based primarily upon the regulatory capital, but in some cases the regulatory requirements do not reflect fully the varying degree of risk associated with different activities. In such cases the capital requirements may be flexed to reflect differing risk profiles, subject to the overall level of capital to support a particular operation or activity not falling below the minimum required for regulatory purposes. The process of allocating capital to specific operations and activities is undertaken independently of those responsible for the operation, by the Group Risk and Group Credit, and is subject to review by the Group Credit Committee or ALMAC as appropriate.

Although maximisation of the return on risk-adjusted capital is the principal basis used in determining how capital is allocated within the Group to particular operations or activities, it is not the sole basis used for decision making. Account also is taken of synergies with other operations and activities, the availability of management and other resources, and the fit of the activity with the Group’s longer term strategic objectives. The Group’s policies in respect of capital management and allocation are reviewed regularly by the Board of Directors.

6. Use of estimates and judgments

These disclosures supplement the commentary on financial risk management (see note 4). Key sources of estimation uncertainty

Allowances for credit losses Assets accounted for at amortised cost are evaluated for impairment on a basis described in accounting policy 3b (j)(viii). The specific counterparty component of the total allowances for impairment applies to claims evaluated individually for impairment and is based upon management’s best estimate of the present value of the cash flows that are expected to be received. In estimating these cash flows, management makes judgements about a counter party’s financial situation and the net realisable value of any underlying collateral. Each impaired asset is assessed on its merits, and the workout strategy and estimate of cash flows considered recoverable are independently approved by the Credit Risk function.

Collectively assessed impairment allowances cover credit losses inherent in portfolios of loans and advances and held to maturity investment securities with similar economic characteristics when there is objective evidence to suggest that they contain impaired loans and advances and held to maturity investment securities, but the individual impaired items cannot yet be identified. A component of collectively assessed allowances is for country risks. In assessing the need for collective loan loss allowances, management considers factors such as credit quality, portfolio size, concentrations, and economic factors. In order to estimate the required allowance, assumptions are made to define the way inherent losses are modelled and to determine the required input parameters, based on historical experience and current economic conditions. The accuracy of the allowances depends on how well future cash flows for specific counterparty allowances and the model assumptions and parameters used in determining collective allowances are estimated.


163

Determining fair values The determination of fair value for financial assets and liabilities for which there is no observable market price requires the use of valuation techniques as described in accounting policy 3b (j)(vii). For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

Critical accounting judgements in applying the Group’s accounting policies Critical accounting judgements made in applying the Group’s accounting policies include:

Financial asset and liability classification The Group’s accounting policies provide scope for assets and liabilities to be designated on inception into different accounting categories in certain circumstances: 1. In classifying financial assets or liabilities as “trading”, the Group has determined that it

meets the description of trading assets and liabilities set out in accounting policy 3b(j)(i). 2. In designating financial assets or liabilities as available for sale, the Group has determined

that it has met one of the criteria for this designation set out in accounting policy 3b (o)(iii). 3. In classifying financial assets as held-to-maturity, the Group has determined that it has both

the positive intention and ability to hold the assets until their maturity date as required by accounting policy 3b(o)(i).

Details of the Group’s classification of financial assets and liabilities are given in note 8. Depreciation and carrying value of property and equipment The estimation of the useful lives of assets is based on management’s judgement. Any material adjustment to the estimated useful lives of items of property and equipment will have an impact on the carrying value of these items. Determination of impairment of property and equipment, and intangible assets Management is required to make judgements concerning the cause, timing and amount of impairment. In the identification of impairment indicators, management considers the impact of changes in current competitive conditions, cost of capital, availability of funding, technological obsolescence, discontinuance of services and other circumstances that could indicate that impairment exists. The Group applies the impairment assessment to its separate cash generating units. This requires management to make significant judgements and estimates concerning the existence of impairment indicators, separate cash generating units, remaining useful lives of assets, projected cash flows and net realisable values. Management’s judgement is also required when assessing whether a previously recognised impairment loss should be reversed.

Defined benefits plan The present value of the retirement benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. Any changes in these assumptions will impact the carrying amount of pension obligations. The assumptions used in determining the net cost (income) for pensions include the discount rate. The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows


164

expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension liability. Other key assumptions for pension obligations are based in part on current market conditions. Impairment of available-for-sale equity investments The Group determines that available-for-sale equity investments are impaired when there has been a significant or prolonged decline in the fair value below cost. This determination of what is significant or prolonged requires judgement. In making this judgement, the Group evaluates among other factors, the volatility in share price. In addition, objective evidence of impairment may be deterioration in the financial health of the investee, industry and sector performance, changes in technology, and operational and financing cash flows. Valuation of financial instruments The Group’s accounting policy on fair value measurements is discussed under note 3b (j)(vii) The Group measures fair values using the following hierarchy of methods. Level 1: Quoted market price in an active market for an identical instrument. Level 2: Valuation techniques based on observable inputs. This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data. Level 3: This includes financial instruments, the valuation of which incorporate significant inputs for the asset or liability that is not based on observable market date (unobservable inputs). Unobservable inputs are those not readily available in an active market due to market illiquidity or complexity of the product. These inputs are generally determined based on inputs of a similar nature, historic observations on the level of the input or analytical techniques. This category includes loans and advances to banks and customers, investment securities, deposits from banks and customers, debt securities and other borrowed funds.

Notes to the financial statementsGuaranty Trust Bank Plc and Subsidiary Companies

The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level in the fair

value hierarchy into which the fair value measurement is categorised:

Group

Jun-2013

In thousands of Nigerian Naira Note Level 1 Level 2 Level 3 Total


-Debt securities 26 31,066,348 - - 31,066,348

Available-for-sale financial assets:

-Investment securities-debt 27 285,127,857 5,116,925 - 290,244,782

-Investment securities-equity 27 - - 4,386,799 4,386,799

Assets pledged as collateral 28 27,529,108 - - 27,529,108

343,723,313 5,116,925 4,386,799 353,227,037

Group

Dec-2012



-Debt securities 26 271,073,896 - - 271,073,896


-Investment securities-equity 27 - 12,926,197 - 12,926,197


287,535,479 12,926,197 - 300,461,676

Parent

Jun-2013



-Debt securities 26 27,358,077 - - 27,358,077


-Investment securities-debt 27 277,205,309 5,116,925 282,322,234

-Investment securities-equity 27 - - 4,386,799 4,386,799


332,092,494 5,116,925 4,386,799 341,596,218

165


Parent

Dec-2012



-Debt securities 26 267,417,182 - - 267,417,182


-Investment securities-equity 27 - 7,303,799 - 7,303,799


283,878,765 7,303,799 - 291,182,564

166

167

Disclosure Requirements For Equity Securities Valuation Technique: The Group has estimated the fair value of its investments in Kakawa Discount House Limited (KDHL) and African Finance Corporation (AFC) at the end of June 2013. The valuation technique adopted in valuing each of these equity investments have been carefully chosen by taking into cognizance the suitability of the valuation model to each equity investment and the financial information available about them. The Dividend Discount Model (DDM) was used in valuing KDHL while the average of an aggregate of multiples (based on the Indicative Valuation Report of AFC by KMPG, an independent professional services firm) was used in valuing AFC. These are compliant with Level 3 of the Fair Value hierarchy as enshrined in IFRS 13 – Fair Value Measurement. Description of Valuation Methodology and inputs: A. Kakawa Discount House Limited The DDM was used for KDHL based on the fact that the company has a history of dividend payments – a critical component/input in the DDM while for AFC, the price to book value multiple (P/BV) as contained in an April 12, 2013 independent valuation report prepared by KPMG was used. The December 2012 audited financial statements of each of the entities have been used as the basis for the valuation. In valuing this company, we adopted the Dividend Discount Model using the 2012 Financial Statements. The key parameters and assumptions used in the calculation are as follows: 1. Dividend growth rate: This was arrived at by multiplying the Return on Equity (ROE) by the Retention ratio (b). The retention ratio was calculated as follows:

= (1 – DPR) where DPR is defined as Dividend Payout Ratio. It is current year Dividend Per Share (DPS) divided by Earnings Per Share (EPS) 2. Cost of Equity: This was derived using the Capital Asset Pricing Model (CAPM). The key variables herein include:

• Risk free rate of 11.8% on FGN Treasury Bill • Beta (measure of Risk) was assumed as 0.8 • Market return of 12% was assumed. This is the prevailing Monetary Policy Rate (MPR) of the

Central Bank of Nigeria. • The estimated dividend growth rate (g) of 7.16% was applied in computing the forward dividend

(d1).

168

B. African Finance Corporation The fair value of AFC was arrived at by using the average of all the indicative values in the independent valuation report of AFC as prepared by KPMG. The multiples include Price-to-Book Value, Discounted Cashflow Value and Excess Return.

*Exchange gain is attributable to the translation of the investment in GIM UEMOA to Naira- the group’s reporting currency. GTB Cote d’Ivoire is the investor in GIM UEMOA. The translated carrying amount of the investment in GIM UEMOA as at 31 Dec, 2012 was ₦4,630,000. The translated balance as at 30 June 2013 is ₦4,847,000. This resulted in an exchange gain of ₦217,000 (i.e. ₦4,847,000 - ₦4,630,000).

Level 2 inputs have been determined using prices of similar assets in active markets.

N'000 N'000 Reference In The Accounts

Specific Provision as at 31 December 2012 20,842,727

1% General Provision as at 31 December 2012 7,290,414

Additional General Provision as at 30 June 2013 1,062,164 29,195,305

Impairment Allowance (Specific & Collective) as at 31 December 2012 -16,820,339

Additions to Impairment Allowance (Specific & Collective) as at 30 June 2013 -743,013 Note 25

Impairment Allowance (Specific & Collective) as at 30 June 2013 (17,563,352)

Opening as at 1 Jan 2013 -11,312,801

Transfers for the period -1,143,850 SOCIE1 - Page 50

Balance as at 30 June 2013 -12,456,651 SOCIE1 - Page 50

Total Loan Loss Provisions as at 30 June 2013 -30,020,003

Excess of Loan Loss reserves over CBN requirement 824,699

Provisions for Other Known Losses

Provision for Other Known Losses - CBN as at 31 December 2012 4,445,780Less: Write offs during the period -676,061 Note 25

3,769,719

Specific Impairment For Equities 3,464,163 Note 27

Impairment On Other Assets 305,556 3,769,719 Note 33

-

1 Statement of Changes in Equity

2Regulatory Risk Reserve refers to the difference between the Provision assessment under CBN Prudential Guideline and impairment assessment under IFRS

Reconciliation of IFRS and CBN Recommended Provisions as at 30 June 2013

Recommended provisions as per CBN

Impairment Allowance Under IFRS

Regulatory Risk Reserve

Provision for Other Known Losses - IFRS

169


170

7. Operating segments The Group has five reportable segments, as described below, which are the Group’s strategic business units. The strategic business units offer varied products and services, and are managed separately based on the Group’s management and internal reporting structure. For each of the strategic business units, the Executive Management Committee reviews internal management reports on at least a quarterly basis. Before the adoption of IFRS in Nigeria, the Group presented segment information to its Executive Management Committee, headed by the Group Managing Director, who is the Group’s Chief Operating Decision Maker, based on Nigerian Generally Acceptable Accounting Practice (GAAP) whose requirements differ from those of International Financial Reporting Standards in certain respects. Some of the key differences include:

1. Interest income on impaired assets is not recognised under Nigerian GAAP while IFRS requires that such interest income be recognised in the income statement.

2. Provision for loan loss is determined based on Central Bank of Nigeria Prudential

Guidelines under Nigerian GAAP while an incurred loss model is used in determining the impairment loss under IFRS.

3. Credit related fees are recognised in the profit and loss account at the time of occurrence

under Nigeria GAAP while under IFRS, credit related fees are recognised as part of effective interest or over the period of the contract depending on the nature of the contract.

However, with the adoption of IFRS, the segment information are now based on IFRS standards. The following summary describes the operations in each of the Group’s reportable segments:

•Corporate banking – Incorporates current accounts, deposits, overdrafts, loans and other credit facilities, foreign currency and derivative products offered to very large corporate customers and blue chips.

•Commercial banking – Incorporates current accounts, deposits, overdrafts, loans and other

credit facilities, foreign currency and derivative products for mid-size and fledgling corporate customers.

•Retail banking – Incorporates private banking services, private customer current accounts,

savings deposits, investment savings products, custody, credit and debit cards, consumer loans and mortgages.

•SME banking – Incorporates current accounts, deposits, overdrafts, loans and other credit

facilities, foreign currency and derivative products for small and medium-size enterprises and ventures.

•Public Sector – Incorporates current accounts, deposits, overdrafts, loans and other credit

facilities, foreign currency and derivative products for Government Ministries, Departments and Agencies.


171

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before income tax, as included in the internal management reports that are reviewed by the Executive Management Committee. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on an arm’s length basis. No single external customer accounts for 10% or more of the Group’s revenue. The measurement policies the Group uses for segment reporting are the same as those used in its financial statements, except that activities of Staff Investment Trust have not been consolidated in arriving at the operating profit, assets and liabilities of the operating segment. There have been no changes from prior years in the measurement methods used to determine reported segment profit or loss. Reclassifications done in prior year has not been reflected in the operating segment. However, the new segments carved out of retail segment have been separately disclosed.



Operating segments (Continued)Information about operating segments

Group

Jun-2013

In thousands of Nigerian Naira Corporate Retail Commercial SME Public Sector Total Continuing Discontinued Total

Banking Banking Banking Banking Banking Operations Operations

Revenue:

Derived from external customers 57,730,827 23,618,214 25,404,740 5,867,817 7,997,096 120,618,694 - 120,618,694

Derived from other business segments (6,359,088) 4,896,095 (334,427) 1,092,918 704,502 - - -

Total revenue 51,371,739 28,514,309 25,070,313 6,960,735 8,701,598 120,618,694 - 120,618,694

Interest expenses (11,894,215) (3,976,510) (4,579,351) (1,000,503) (2,010,032) (23,460,611) - (23,460,611)

Fee and commission expenses (274,083) (94,393) (89,421) (23,510) (9,416) (490,823) - (490,823)

Net operating income 39,203,441 24,443,406 20,401,541 5,936,722 6,682,150 96,667,260 - 96,667,260

Expense:

Operating expenses (7,377,965) (14,827,740) (8,793,624) (3,469,250) (2,650,633) (37,119,212) - (37,119,212)

Net impairment loss on financial assets (194,153) (370,281) (516,864) (53,444) (182,790) (1,317,532) - (1,317,532)

Depreciation and amortization (1,460,175) (1,817,697) (994,027) (374,196) (256,436) (4,902,531) - (4,902,531)

Total cost (9,032,293) (17,015,718) (10,304,515) (3,896,890) (3,089,859) (43,339,275) - (43,339,275)

Profit before income tax from reportable segments 30,171,147 7,427,688 10,097,026 2,039,832 3,592,291 53,327,984 - 53,327,984

Tax (4,723,933) (1,162,962) (1,580,903) (319,379) (562,449) (8,349,626) - (8,349,626)

Profit after income tax from reportable segments 25,447,214 6,264,726 8,516,123 1,720,453 3,029,842 44,978,358 - 44,978,358

Assets and liabilities:

Total assets 1,061,493,943 210,529,799 399,105,265 53,914,826 136,857,902 1,861,901,735 - 1,861,901,735

Total liabilities (529,458,029) (502,507,258) (260,481,599) (119,116,042) (144,855,996) (1,556,418,924) - (1,556,418,924)

Net assets/ (liabilities) 532,035,914 (291,977,459) 138,623,666 (65,201,216) (7,998,094) 305,482,811 - 305,482,811

Additions to Non-Current Assets

Additions to Non-Current Assets 4,708,688 1,720,376 983,908 239,161 607,089 8,259,222 - 8,259,222

Assets:

Loans and advances to banks 18,538 1,721,588 59,536 2,341,122 2,634 4,143,418 - 4,143,418

Loans and advances to customers 525,101,434 69,982,878 213,247,084 17,673,869 68,857,711 894,862,976 - 894,862,976

Others 536,373,971 138,825,333 185,798,645 33,899,835 67,997,557 962,895,341 - 962,895,341

1,061,493,943 210,529,799 399,105,265 53,914,826 136,857,902 1,861,901,735 - 1,861,901,735

Liabilities:

Deposits from banks 17,657,973 - - - - 17,657,973 - 17,657,973

Deposits from customers 287,328,861 485,504,128 234,910,260 111,710,084 134,991,975 1,254,445,308 - 1,254,445,308

Others 224,471,195 17,003,130 25,571,339 7,405,958 9,864,021 284,315,643 - 284,315,643

529,458,029 502,507,258 260,481,599 119,116,042 144,855,996 1,556,418,924 - 1,556,418,924

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Group

Jun-2012



Revenue:

Derived from external customers 58,491,374 18,617,955 19,557,544 4,823,690 7,936,600 109,427,163 653,126 110,080,289

Derived from other business segments (11,111,614) 9,638,113 (1,615,785) 1,167,823 1,921,463 - - -

Total revenue 47,379,760 28,256,068 17,941,759 5,991,513 9,858,063 109,427,163 653,126 110,080,289

Interest expenses (13,137,117) (1,528,053) (2,891,588) (448,323) (780,369) (18,785,450) (288,992) (19,074,442)

Fee and commission expenses (304,952) (149,169) (226,951) (38,878) (63,123) (783,073) (2,006) (785,079)

Net operating income 33,937,691 26,578,846 14,823,220 5,504,312 9,014,571 89,858,640 362,128 90,220,768

Expense:

Operating expenses (7,540,357) (13,667,665) (7,059,627) (2,719,713) (2,030,375) (33,017,737) (155,568) (33,173,305)

Net impairment loss on financial assets (2,092,242) (77,563) (105,421) (11,082) (124,555) (2,410,863) - (2,410,863)

Depreciation and amortization (732,573) (1,821,688) (1,011,280) (356,363) (266,039) (4,187,943) (8,523) (4,196,466)

Total cost (10,365,172) (15,566,916) (8,176,328) (3,087,158) (2,420,969) (39,616,543) (164,091) (39,780,634)

Profit before income tax from reportable segments 23,572,519 11,011,930 6,646,892 2,417,154 6,593,602 50,242,097 198,037 50,440,134

Tax (4,032,837) (1,973,207) (1,161,569) (409,308) (1,116,524) (8,693,445) - (8,693,445)

Profit after income tax from reportable segments 19,539,682 9,038,723 5,485,323 2,007,846 5,477,078 41,548,652 198,037 41,746,689


Total assets 994,092,951 187,741,118 371,737,565 53,043,646 129,850,297 1,736,465,577 - 1,736,465,577


Net assets/ (liabilities) 483,737,515 (256,589,586) 126,089,449 (61,573,446) 704,964 292,368,896 - 292,368,896



Dec-2012

Assets:

Loans and advances to banks 2,461,628 1,100,068 773,341 529,302 485 4,864,824 - 4,864,824


Others 536,963,891 133,016,534 180,124,467 36,494,809 65,951,034 952,550,735 - 952,550,735

994,092,951 187,741,118 371,737,565 53,043,646 129,850,297 1,736,465,577 - 1,736,465,577

Liabilities:



Others 243,150,423 910,039 17,402,602 4,253,968 6,322,225 272,039,257 - 272,039,257

510,355,436 444,330,704 245,648,116 114,617,092 129,145,333 1,444,096,681 - 1,444,096,681

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Operating segments (Continued)Information about operating segments

Parent

Jun-2013



Revenue:


Derived from other business segments (6,359,088) 4,896,095 (334,427) 1,092,918 704,502 - - -

Total revenue 46,462,342 26,500,627 22,933,274 6,960,735 8,701,598 111,558,576 - 111,558,576

Interest expenses (10,957,653) (3,537,447) (4,293,868) (1,000,503) (2,010,032) (21,799,503) - (21,799,503)



Expense:


Net impairment loss on financial assets (14,850) (357,523) (499,270) (53,444) (182,790) (1,107,877) - (1,107,877)

Depreciation and amortization (1,202,820) (1,713,555) (911,677) (374,196) (256,436) (4,458,684) - (4,458,684)

Total cost (6,310,944) (15,760,846) (9,411,714) (3,896,890) (3,089,859) (38,470,253) - (38,470,253)


Tax (4,170,287) (1,025,721) (1,318,861) (293,983) (517,725) (7,326,577) - (7,326,577)



Total assets 939,829,327 207,692,089 398,262,038 53,914,826 136,857,902 1,736,556,182 - 1,736,556,182


Net assets/ (liabilities) 533,494,365 (303,432,407) 142,275,402 (65,201,216) (7,998,094) 299,138,050 - 299,138,050



Assets:

Loans and advances to banks 18,982 7,711 2,592 724 2,489 32,498 - 32,498


Others 444,302,958 140,028,592 196,976,502 35,027,797 71,878,243 888,214,092 - 888,214,092

939,829,327 207,692,089 398,262,038 53,914,826 136,857,902 1,736,556,182 - 1,736,556,182

Liabilities:



Others 139,569,212 62,784,108 39,057,982 15,956,997 20,197,211 277,565,510 - 277,565,510

406,334,962 511,124,496 255,986,636 119,116,042 144,855,996 1,437,418,132 - 1,437,418,132

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Parent

Jun-2012



Revenue:


Derived from other business segments (6,212,813) 4,026,958 (903,431) 1,167,823 1,921,463 - - -

Total revenue 49,087,314 20,660,306 17,417,140 5,991,513 9,858,063 103,014,336 - 103,014,336

Interest expenses (12,362,289) (1,365,459) (2,721,041) (448,323) (780,369) (17,677,481) - (17,677,481)



Expense:


Net impairment loss on financial assets (1,472,523) (21,498) (77,698) (11,082) (124,555) (1,707,356) - (1,707,356)

Depreciation and amortization (658,988) (1,576,185) (909,699) (356,363) (266,039) (3,767,274) - (3,767,274)

Total cost (8,269,357) (13,626,904) (7,445,649) (3,087,158) (2,420,969) (34,850,037) - (34,850,037)


Tax (4,482,209) (936,474) (1,196,810) (409,308) (1,116,524) (8,141,325) - (8,141,325)



Total assets 875,522,596 186,871,487 375,029,197 53,043,646 129,850,297 1,620,317,223 - 1,620,317,223


Net assets/ (liabilities) 484,548,816 (268,758,793) 133,232,089 (61,573,446) 704,964 288,153,630 - 288,153,630


Additions to Non-Current Assets 939,829,327 207,692,089 398,262,038 53,914,826 136,857,902 1,736,556,182 - 1,736,556,182

Dec-2012

Assets:

Loans and advances to banks 90,062 40,247 28,294 19,364 18 177,985 - 177,985


Others 442,477,007 135,030,023 193,511,078 37,366,673 69,317,513 877,702,294 - 877,702,294

875,522,596 186,871,487 375,029,197 53,043,646 129,850,297 1,620,317,223 - 1,620,317,223

Liabilities:



Others 160,396,533 48,540,151 32,252,305 13,296,288 16,385,422 270,870,699 - 270,870,699

390,973,780 455,630,280 241,797,108 114,617,092 129,145,333 1,332,163,593 - 1,332,163,593

175



7 Operating segments (Continued) The following is an analysis of the Group’s revenue and gains from continuing operations by products and services;



Bonds 8,619,584 26,350,477 7,992,125 24,631,927

Placements 24,665,940 2,581,848 22,870,393 2,413,463

Treasury Bills 5,299,218 1,212,254 4,913,464 1,133,192

Loans 84,047,830 81,637,992 77,929,605 76,313,647

Contingents 1,569,791 1,743,931 1,455,518 1,630,194

124,202,363 113,526,502 115,161,105 106,122,423

Reconciliation of reportable segment revenues, operating expenses, profit or loss and assets and liabilities

Reconciliation of revenues



Continuing Operations:

Total revenue from reportable segments 120,618,694 109,427,163 111,558,576 103,014,336

Consolidation and adjustments:

- Interest income (41,093) (38,829) - -

- Other operating income 2,558 - - -

Revenue from continuing operations 120,580,158 109,388,334 111,558,576 103,014,336

Discontinued Operations:

Total revenue from reportable segments (See note 34) - 653,126 - -

Revenue from discontinued operations - 653,126 - -

176



Revenue from continuing operations as shown above is made up of:



Interest income 92,000,395 83,176,926 86,280,338 79,179,733

Fee and commission income 25,048,165 24,809,180 21,615,202 22,012,856

Net gains/(losses) on financial instruments classified as

held for trading 3,517,125 2,981,141 2,711,183 2,069,859

Other operating income 3,636,678 2,559,255 4,554,382 2,859,975

Revenue and gains from continuing operations 124,202,363 113,526,502 115,161,105 106,122,423

Less gains:

- Foreign exchange gain/(loss) (3,568,303) (1,601,011) (3,562,977) (1,493,645)

- Gain on disposal of fixed assets (53,902) (44,948) (39,552) (33,515)

- Net gains/(losses) on financial instruments classified

as held for trading - (2,981,141) - (2,069,859)

- Profit on part-disposal of subsidiaries - - - -

- Net portfolio (loss)/gain on SMEEIS investments - 488,932 - 488,932

Revenue from continuing operations 120,580,158 109,388,334 111,558,576 103,014,336

Reconciliation of operating expenses




Total operating expense from reportable segments 37,119,212 33,017,737 32,903,692 29,375,407

Gains:


- Personnel expenses1(452,833) 705,352 - -

Operating expense from continuing operations 36,666,379 33,723,089 32,903,692 29,375,407


Total Expense from reportable segments - 155,568 - -

Interest expense - 288,992

Fee and commission expense - 2,006

Net impairment loss on financial assets - -

Depreciation expense - 8,523 - -

Expense from discontinued operations (See Note34) - 455,089 - - 1 relates to share based payments during the period

177



Operating expense from continuing operations as shown above is made up of:



Personnel expenses (See Note17) 10,976,285 10,400,084 9,705,384 8,213,674

General and administrative expenses (See Note18) 11,832,237 11,097,511 10,724,159 10,299,338

Operating lease expenses 410,118 638,698 306,534 383,482

Other operating expenses (See Note20) 13,447,739 11,586,796 12,167,615 10,478,913

36,666,379 33,723,089 32,903,692 29,375,407

Reconciliation of profit or loss




Total profit or loss for reportable segments 53,327,984 50,242,097 50,836,282 49,739,739


- Interest income (41,093) (38,829) - -

- Personnel expenses 452,833 (705,352) - -

- Other operating income 2,558 -

Gains:

- Foreign exchange gain/(loss) 3,568,303 1,601,011 3,562,977 1,493,645

- Gain on disposal of fixed assets 53,902 44,948 39,552 33,515 - Net gains/(losses) on financial instruments classified

as held for trading - 2,981,141 - 2,069,859

- Profit on part-disposal of subsidiaries - - - -

- Net portfolio (loss)/gain on SMEEIS investments - (488,932) - (488,932)

Profit before income tax from continuing operations 57,364,487 53,636,084 54,438,811 52,847,826

Reconciliation of profit or loss (Continued)



Jun-2013 Jun-2012 Jun-2013 Jun-2012

Total profit or loss for reportable segments (See note

34) - 198,037 - -

Gains on disposal of disposal group (See note 34) - 411,040 - -

Tax (See note 34) - - - -

Profit for the period from discontinued operations - 609,077 - -

178



Reconciliation of assets




Total assets for reportable segments 1,861,901,735 1,736,465,577 1,736,556,182 1,620,317,223

Consolidation and adjustments (1,407,331) (1,587,717) - -

Total assets 1,860,494,404 1,734,877,860 1,736,556,182 1,620,317,223


Total assets for reportable segments (See note 34) - - - -

Consolidation and adjustments - - - -

Total assets - - - -

Reconciliation of liabilities




Total liabilities for reportable segments 1,556,418,924 1,444,096,681 1,437,418,132 1,332,163,593

Consolidation and adjustments 7,126,099 7,340,059 - -

Total liabilities 1,563,545,023 1,451,436,740 1,437,418,132 1,332,163,593


Total liabilities for reportable segments (See note 34) - - - -

Consolidation and adjustments - - - -

Total liabilities - - - -

179



Geographical segments The Group operates in three geographic regions, being:

· Nigeria

· Rest of West Africa (comprising Ghana, Gambia, Sierra Leone and Liberia)

· Europe (UK and the Netherlands)

Jun-2013

Rest of Total Continuing Discontinued

In thousands of Nigerian Naira Nigeria West Africa Europe Operations Operations Total

Nigeria

Derived from external customers 110,550,045 8,975,713 1,054,400 120,580,158 - 120,580,158

Derived from other segments - - - - - -

Total Revenue 110,550,045 8,975,713 1,054,400 120,580,158 - 120,580,158

Interest expense (21,799,505) (1,602,563) (58,543) (23,460,611) - (23,460,611)

Fee and commission expenses (452,534) (38,289) - (490,823) - (490,823)

Net interest margin 88,298,006 7,334,861 995,857 96,628,724 - 96,628,724

Profit before income tax 53,885,672 3,442,759 36,056 57,364,487 - 57,364,487


Total assets 1,698,482,535 105,219,177 56,792,692 1,860,494,404 - 1,860,494,404

Total liabilities (1,363,760,680) (82,472,250) (117,312,093) (1,563,545,023) - (1,563,545,023)

Net assets/(liabilities) 334,721,855 22,746,927 (60,519,401) 296,949,381 - 296,949,381

180



Jun-2012

Rest of Total Continuing Discontinued

In thousands of Nigerian Naira Nigeria West Africa Europe Operations Operations Total

Nigeria

Derived from external customers 102,594,817 5,934,465 859,052 109,388,334 653,126 110,041,460

Derived from other segments - - - - - -

Total Revenue 102,594,817 5,934,465 859,052 109,388,334 653,126 110,041,460

Interest expense (17,677,481) (1,033,751) (74,218) (18,785,450) (288,992) (19,074,442)

Fee and commission expenses (747,079) (35,994) - (783,073) (2,006) (785,079)

Net interest margin 84,170,257 4,864,720 784,834 89,819,811 362,128 90,181,939

Profit before income tax 52,847,826 781,904 6,354 53,636,084 198,037 53,834,121

Dec-2012


Total assets 1,646,656,189 28,343,442 59,878,229 1,734,877,860 - 1,734,877,860

Total liabilities (1,356,994,614) (37,564,804) (56,877,322) (1,451,436,740) - (1,451,436,740)

Net assets/(liabilities) 289,661,575 (9,221,362) 3,000,907 283,441,120 - 283,441,120

181



8 Financial assets and liabilitiesAccounting classification measurement basis and fair values

The table below sets out the Group’s classification of each class of financial assets and liabilities, and their fair values.

Group

Jun-2013 Other financial

Held for Designated at Held-to- Loans and Available- liabilities at Total

In thousands of Nigerian Naira Note trading fair value maturity receivables for-sale amortized cost carrying amount Fair value

Cash and cash equivalents 23 - - - 232,414,899 - - 232,414,899 242,690,412

Loans and advances to banks 24 - - - 4,143,418 - - 4,143,418 4,073,521

Loans and advances to customers 25 - - - 894,862,976 - - 894,862,976 904,942,045

Financial assets held for trading 26 31,066,348 - - - - - 31,066,348 31,066,348

Assets pledged as collateral 28 - - 27,529,108 - - - 27,529,108 27,529,108

Investment securities 27 - - 120,598,110 - 296,801,242 - 417,399,352 417,399,352

Other assets 33 - - - 162,176,436 - - 162,176,436 162,176,436

31,066,348 - 148,127,218 1,293,597,729 296,801,242 - 1,769,592,537 1,789,877,222

Deposits from banks 35 - - - - - 17,657,973 17,657,973 18,158,086

Deposits from customers 36 - - - - - 1,254,445,308 1,254,445,308 1,230,326,615

Debt securities issued 37 - - - - - 94,007,480 94,007,480 95,040,562

Other borrowed funds 40 - - - - - 90,191,530 90,191,530 90,698,340

Other liabilities 38 - - - - - 89,462,161 89,462,161 89,462,161

- - - - - 1,545,764,452 1,545,764,452 1,523,685,764

182



Group

Dec-2012 Other financial




Loans and advances to banks 24 - - - 4,864,824 - - 4,864,824 5,072,973



Assets pledged as collateral 28 16,461,583 - 14,741,647 - - - 31,203,230 31,203,230


Other assets 33 - - - 102,889,644 - - 102,889,644 102,889,644

287,535,479 - 144,232,457 1,209,793,966 15,765,789 - 1,657,327,691 1,657,648,245






- - - - - 1,432,517,571 1,432,517,571 1,430,586,897

183



Parent

Jun-2013 Other financial




Loans and advances to banks 24 - - - 32,498 - - 32,498 32,514



Assets pledged as collateral 28 - - 27,529,108 - - - 27,529,108 27,529,108


Other assets 33 - - - 160,742,908 - - 160,742,908 160,742,908

27,358,077 - 129,221,634 1,189,441,200 288,873,847 - 1,634,894,758 1,665,414,762






- - - - - 1,420,015,300 1,420,015,300 1,422,290,759

184



Parent

Dec-2012 Other financial




Loans and advances to banks 24 - - - 177,985 - - 177,985 178,001



Assets pledged as collateral 28 16,461,583 - 14,741,647 - - - 31,203,230 31,203,230


Other assets 33 - - - 101,660,574 - - 101,660,574 101,660,574

283,878,765 - 133,639,564 1,100,709,063 10,138,761 - 1,528,366,153 1,532,610,644






- - - - - 1,313,598,059 1,313,598,059 1,313,255,097

185



Accounting classification measurement basis

Financial instruments at fair value (including those held for trading, designated at fair value, derivatives and available-for

-sale) are either priced with reference to a quoted market price for that instrument or by using a valuation model. Where

the fair value is calculated using a valuation model, the methodology is to calculate the expected cash flows under the

terms of each specific contract and then discount these values back to a present value. The expected cash flows for each

contract are determined either directly by reference to actual cash flows implicit in observable market prices or through

modelling cash flows using appropriate financial markets pricing models. Wherever possible these models use as their

basis observable market prices and rates including, for example, interest rate yield curves, equities and prices.

9 Interest incomeGroup Group Parent Parent


Loans and advances to banks 156,732 134,153 2,113 13,678

Loans and advances to customers 56,510,285 55,546,568 53,115,597 53,140,150

56,667,017 55,680,721 53,117,710 53,153,828

Cash and cash equivalents 2,057,250 2,776,575 1,451,161 2,257,567

Financial assets held for trading 2,090,922 292,590 2,090,918 286,083


– Available for sale - Bonds 415,378 - 415,378 -

– Available for sale - Treasury Bills 20,429,036 14,967,920 20,429,036 14,967,920

– Held to maturity 9,360,226 8,328,349 7,795,569 7,383,564

Assets pledged as collateral 980,566 1,130,771 980,566 1,130,771

92,000,395 83,176,926 86,280,338 79,179,733

Geographical location

Interest income earned in Nigeria 84,876,337 76,319,021 84,917,431 76,357,850

Interest income earned outside Nigeria 7,124,058 6,857,905 1,362,907 2,821,883

92,000,395 83,176,926 86,280,338 79,179,733

Interest income for the period ended 30 June 2013 includes N1,655,839,000 (June 2012:N2,002,032,000)

accrued on impaired financial assets.

186



10 Interest expenseGroup Group Parent Parent


Deposit from banks 475,535 661,408 306,814 326,850

Deposit from customers 17,607,084 12,270,077 16,143,194 11,565,277

18,082,619 12,931,485 16,450,008 11,892,127

Other borrowed funds 1,532,012 1,564,156 4,468,175 4,901,133

Debt securities 3,845,980 4,289,809 881,320 884,221

Total interest expense 23,460,611 18,785,450 21,799,503 17,677,481

Geographical location

Interest expense paid in Nigeria 17,668,775 13,014,157 17,657,736 13,028,253

Interest expense paid outside Nigeria 5,791,836 5,771,293 4,141,767 4,649,228

23,460,611 18,785,450 21,799,503 17,677,481

11 Loan impairment chargesGroup Group Parent Parent


Loans and advances to banks (Note 24) (232) (38,408) (232) (38,408)

Increase in collective impairment - 954 - 954

Increase in specific impairment - 3 - 3

Reversal of collective impairment (229) - (229) -

Reversal of specific impairment (3) (39,365) (3) (39,365)

Loans and advances to customers (Note 25) 1,317,764 2,449,271 1,108,109 1,745,764

Increase in collective impairment 2,451,002 158,157 2,356,531 81,588

Increase in specific impairment11,123,196 7,664,783 939,794 6,694,321

Reversal of collective impairment - (3,254,571) - (3,243,389)

Reversal of specific impairment (2,206,701) (2,126,302) (2,138,482) (1,789,171)

Amounts written off during the period as

uncollectible 1,243 7,204 1,243 2,415

Income received on claims previously written off (50,976) - (50,977) -

1,317,532 2,410,863 1,107,877 1,707,356

187



12 Fee and commission income



Credit related fees and commissions 7,207,641 5,545,721 6,079,011 4,839,955

Commission on turnover 7,115,710 7,848,518 6,802,106 7,586,044

Corporate finance fees 1,513,297 846,155 1,051,225 232,635

Commission on foreign exchange deals 2,098,686 2,442,089 2,098,686 2,442,089

Income from financial guarantee contracts issued 2,826,116 4,041,318 2,683,380 3,922,385

Other fees and commissions14,286,715 4,085,379 2,900,794 2,989,748

25,048,165 24,809,180 21,615,202 22,012,856

1 Other fees and commissions include card related income and other e-channel income.

13 Fee and commission expense Group Group Parent Parent


Bank charges 400,067 34,404 399,833 34,404

Other fees and commission expense190,756 748,669 52,705 712,675

490,823 783,073 452,538 747,079

1 Largely comprises of loan recovery expenses

14 Net gains/(losses) on financial instruments classified as held for trading



Bonds trading 768,031 656,328 768,031 656,328

Treasury bills trading 853,921 130,019 853,921 130,019

Foreign exchange 1,895,173 2,194,794 1,089,231 1,283,512

Net trading income 3,517,125 2,981,141 2,711,183 2,069,859

188



15 Other incomeGroup Group Parent Parent


Mark to market gains on trading investments (153,753) 1,176,919 (153,753) 1,176,919

Foreign exchange gain/(loss) 3,568,303 1,601,011 3,562,977 1,493,645

Gain on disposal of fixed assets 53,902 44,948 39,552 33,515

Net portfolio (loss)/gain on SMEEIS investments - (488,932) - (488,932)

Dividends income 168,226 126,356 1,105,606 644,828

Other income - 98,953 - -

3,636,678 2,559,255 4,554,382 2,859,975

16 Net impairment loss on other financial assets

There is no impairment loss on other financial assets during the period (June 2012: nil)

17 Personnel expenses Group Group Parent Parent

(a) In thousands of Nigerian Naira Note Jun-2013 Jun-2012 Jun-2013 Jun-2012

Wages and salaries 10,763,466 9,181,700 9,235,354 7,761,594

Contributions to defined contribution plans 394,286 426,013 338,981 373,667

Cash-settled share-based payments (see 17(b)

below) (452,833) 705,352 - -

Other staff cost 271,366 87,019 131,049 78,413

10,976,285 10,400,084 9,705,384 8,213,674

Staff loans

Staff received loans at below the market interest rate. These loans are measured at fair value at initial recognition. The

difference between the PV of cash flows discounted at the contractual rate and PV of cash flows discounted at market

rate has been recognised as prepaid employee benefit which is amortised to personnel expense (other staff cost) over

the life of the loan.

Cash- settled share-based payments

The Group operates a cash-settled share based compensation plan (share appreciation rights (SARs)) for its management

personnel. The management personnel are entitled to the share appreciation rights after spending ten years in the Bank.

The amount of cash payment is determined based on the fair value of the shares of the Bank. The details of SARs granted

at the reporting date are provided below:

In thousands Number of shares

SARs granted to senior management employees at 30 June 2013 411,056

SARs granted to senior management employees at 31 December 2012 436,673

189



(b) Employee expenses for share-based payments

Group Group

In thousands of Nigerian Naira Note Jun-2013 Jun-2012

Effect of changes in the fair value of SARs (1,563,728) (223,510)

Expense from rights exercised during the period 403,370 438,980

Dividend payment to members of the scheme 707,525 489,882

Total expense recognized as personnel expenses (452,833) 705,352

Group Group

In thousands of Nigerian Naira Jun-2013 Dec-2012

Total carrying amount of liabilities for

cash-settled arrangements 38 7,126,099 7,340,059

The carrying amount of liabilities for cash-settled share based payments includes:

Group Group

In thousands of Nigerian Naira Note Jun-2013 Dec-2012

Balance, beginning of period 7,340,059 4,985,189

Effect of changes in fair value of SAR at period end (1,563,728) 897,258

Options exercised during the period (77,276) (122,926)

Share rights granted during the period 1,427,044 1,580,538

Balance, end of period 38 7,126,099 7,340,059

190



(i) The average number of persons employed during the period was as follows:


Jun-2013 Jun-2012 Jun-2013 Jun-2012

Number Number Number Number

Executive directors 6 6 6 6

Management 141 156 56 92

Non-management 3,613 3,506 2,757 2,689

3,760 3,668 2,819 2,787

(ii) The average number of persons in employment during the period is shown below:


Jun-2013 Jun-2012 Jun-2013 Jun-2012


Abuja Commercial Banking Division 32 33 32 33

Abuja Public Sector Division 44 44 44 44

Communication and External Affairs 77 70 20 20

International Banking Group And Group

Coordination & Planning 61 39 45 26

Corporate Services Division 149 141 100 86

E-Business Division 108 105 64 61

Enterprise Risk Management Division 98 99 80 83

Human Resources 26 26 26 26

Institutional Banking Division 173 183 163 169

Lagos Island Division 69 69 69 69

Lagos Island Retail Division 85 86 85 86

Lagos Mainland Division 120 120 120 120

Lagos Mainland Retail Division 75 78 75 78

North East Division 45 48 45 48

North West Division 53 54 53 54

Operations Division 222 242 222 242

Public Sector South West & Agric Division 22 21 22 21

Retail Abuja Division 49 52 49 52

Retail South East Division 72 75 72 75

Retail South West Division 82 83 82 83

SME Abuja Division 21 18 21 18

SME Lagos Island 23 21 23 21

SME Lagos Mainland 22 18 22 18

SME South East Division 18 18 18 18

South East Division 40 40 40 40

South South Division 56 54 56 54

Systems and Control Division 109 100 88 79

Technology Division 120 111 87 80

Transaction Services 1,226 1,202 963 949

Wholesale Banking Division 33 34 33 34

Commercial Banking Subsidiaries 48 32 - -

Retail Subsidiaries 127 90 - -

Public Sector Subsidiaries 7 10 - -

Others 248 252 - -

3,760 3,668 2,819 2,787

191



(iii) Average number of employees other than directors, earning more than N720,000 per annum, received emoluments

(excluding pension contributions and certain benefits) in the following ranges:


Jun-2013 Jun-2012 Jun-2013 Jun-2012


N720,001 - N1,400,000 715 714 - -

N1,400,001 - N2,050,000 77 50 13 13

N2,190,001 - N2,330,000 41 25 2 2

N2,330,001 - N2,840,000 12 5 - -

N2,840,001 - N3,000,000 13 6 - -

N3,030,001 - N3,830,000 827 867 810 847

N3,830,001 - N4,530,000 6 10 - -

N4,530,001 - N5,930,000 544 7 540 -

N6,300,001 - N6,800,000 519 554 501 538

N6,800,001 - N7,300,000 19 485 - 478

N7,300,001 - N7,800,000 414 372 406 369

N7,800,001 - N8,600,000 6 275 - 270

N8,600,001 - N11,800,000 273 108 266 95

Above N11,800,000 288 184 275 169

3,754 3,662 2,813 2,781

18 General and administrative expensesGroup Group Parent Parent


Stationery and postage 1,277,545 1,187,051 1,177,677 1,107,949

Business travel expenses 466,310 510,439 432,464 462,217

Advert, promotion and corporate gifts 2,603,064 2,461,699 2,441,621 2,330,032

Repairs and maintenance 2,037,884 1,790,889 1,878,221 1,664,641

Occupancy costs 1,807,949 1,858,064 1,508,345 1,689,021

Directors' emoluments 183,932 198,529 123,589 135,937

Contract services 3,455,553 3,090,840 3,162,242 2,909,541

11,832,237 11,097,511 10,724,159 10,299,338

192



19 Depreciation and amortisationGroup Group Parent Parent


Amortisation of intangible assets (see note 31) 381,403 152,097 295,198 195,268

Depreciation of property, plant and equipment

(see note 30) 4,521,128 4,035,846 4,163,486 3,572,006

4,902,531 4,187,943 4,458,684 3,767,274

20 Other operating expenses Group Group Parent Parent


Finance costs 111,296 130,225 111,191 130,225

Deposit insurance premium 2,623,472 2,212,835 2,614,098 2,208,591

Other insurance premium 789,851 817,638 780,905 817,638

Auditors' remuneration1193,745 146,933 153,594 119,447

Professional fees and other consulting costs 641,627 457,060 520,040 390,673

AMCON expenses 4,039,300 2,067,999 4,039,300 2,067,999

Others25,048,448 5,754,106 3,948,487 4,744,340

13,447,739 11,586,796 12,167,615 10,478,913

1 Auditor's remuneration represents fees for half year audit of the Group and Bank for the period ended 30 June

20132 Included in others are communication expenditures, training, transportation and allowances paid to NYSC Corpers

and Interns.

21 Income tax expense recognised in the Income statement



Current tax expense:

Company income tax 5,721,394 6,224,192 4,788,179 5,672,072

Education Tax 453,331 473,098 453,331 473,098

NITDA Levy 554,388 528,478 554,388 528,478

6,729,113 7,225,768 5,795,898 6,673,648

193



Deferred tax expense:

Origination of temporary differences 1,620,513 1,467,677 1,530,679 1,467,677

8,349,626 8,693,445 7,326,577 8,141,325

Reconciliation of effective tax rate

Group


Profit before income tax 57,364,487 53,636,084

Income tax using the domestic corporation tax rate 17,209,346 30.0% 16,218,646 30.0%

Effect of tax rates in foreign jurisdictions 445,345 0.8% - 0.0%

Tax reliefs/WHT Credits (248,633) -0.4% - 0.0%

Net capital allowance (1,763,147) -3.1% (1,282,092) -2.4%

Non-deductible expenses 1,432,051 2.5% 1,825,451 3.4%

Education tax levy 453,331 0.8% 473,098 0.9%

NITDEF tax levy 554,388 1.0% 528,478 1.0%

Tax exempt income (11,097,419) -19.3% (10,379,270) -19.4%

Current period deferred tax 1,530,679 2.7% 1,467,677 2.7%

Deductible expenses (166,316) -0.3% (158,543) -0.3%

Total income tax expense in comprehensive income 8,349,625 14.6% 8,693,445 16.0%

Reconciliation of effective tax rate

Parent


Profit before income tax 54,438,811 52,847,826

Income tax using the domestic corporation tax rate 16,631,643 30.0% 15,854,348 30.0%

Tax reliefs/WHT Credits (248,633) -0.4% - 0.0%

Net capital allowance (1,763,147) -3.1% (1,282,092) -2.4%

Non-deductible expenses 1,432,051 2.5% 1,825,451 3.4%

Education tax levy 453,331 0.8% 473,098 0.9%

NITDEF tax levy 554,388 1.0% 528,478 1.0%

Tax exempt income (11,097,419) -19.3% (10,567,092) -19.7%

Deductible expenses (166,316) -0.3% (158,543) -0.3%

Current period deferred tax 1,530,679 2.7% 1,467,677 2.7%

Total income tax expense in comprehensive income 7,326,577 13.8% 8,141,325 15.6%

194



Income tax recognised in other comprehensive income



Income tax relating to Foreign currency

translation differences for foreign operations 348,903 - - -

Income tax relating to Net change in fair value of

available for sale financial assets 914,971 366,266 914,022 306,448

1,263,874 366,266 914,022 306,448

(b) Current income tax payable

The movement on the current income tax payable account during the period was as follows:



Balance, beginning of the period 15,630,973 14,062,596 15,340,116 13,760,343

Exchange difference on translation (78,395) (174,364) - -

Charge for the period 6,729,113 15,498,904 5,795,898 13,883,947

Payments during the period (10,318,568) (15,212,334) (9,403,302) (13,760,345)

Prior year under-provision - 1,456,171 - 1,456,171

Liabilities classified as held for sale - - - -

Liabilities of subsidiaries disposed - - - -

Balance, end of the period 11,963,123 15,630,973 11,732,712 15,340,116

195



22 Basic and Diluted earnings per share

Basic earnings per share is calculated by dividing the net profit attributable to equity holders of the company by the

weighted average number of ordinary shares in issue during the period, excluding the average number of ordinary shares

purchased by the company and held as treasury shares.

The calculation of basic earnings per share for the reporting period was based on the profit atttributable to ordinary

shareholders of N48,819,040,000 and a weighted average number of ordinary shares outstanding of 28,260,504,993 and it

calculated as follows:

Profit attributable to ordinary shareholders

Group Group

In thousands of Nigerian Naira Jun-2013 Jun-2012

Net profit attributable to equity holders of the Company 48,819,040 44,828,737

Net profit used to determine diluted earnings per share 48,819,040 44,828,737

Number of ordinary shares

Group Group

In thousands of shares Jun-2013 Jun-2012

Weighted average number of ordinary shares in issue 28,260,505 28,260,505

Basic earnings per share (expressed in naira per share) 1.73 1.59

The Group does not have any dilutive potential ordinary shares. Therefore, Basic EPS and Diluted EPS for continuing

operations are the same for the Group.


Adjustment for:

-Bonus element on conversion of convertible debt - -

-Share options (millions) - -

Weighted average number of ordinary shares for diluted earnings per share 28,260,505 28,260,505

Diluted earnings per share (expressed in naira per share) 1.73 1.59

196



Basic Earnings Per Share (Basic EPS) - Discontinued operations


Profit for the period from discontinued operations - 559,780

Basic earnings per share (expressed in naira per share) 0.00 0.02


Adjustment for:

-Bonus element on conversion of convertible debt - -

-Share options (millions) - -

Weighted average number of ordinary shares for diluted earnings per share 28,260,505 28,260,505

Profit for the period from discontinued operations - 559,780

Diluted earnings per share (expressed in naira per share) 0.00 0.02


Group Group

In millions of shares Jun-2013 Jun-2012

Equity holders of the parent entity (total) 48,819,040 45,388,517

– Profit for the period from continuing operations 48,819,040 44,828,737

– Profit for the period from discontinued operations - 559,780

197



23 Cash and cash equivalents Group Group Parent Parent

(a) In thousands of Nigerian Naira Jun-2013 Dec-2012 Jun-2013 Dec-2012

Cash in hand 23,331,156 40,740,209 18,934,895 23,406,726

Balances held with other banks 100,037,447 120,706,024 60,251,415 74,806,177

Unrestricted balances with central banks 8,002,058 14,116,151 - 7,691,952

Money market placements 101,044,238 147,427,096 101,169,892 150,528,705

232,414,899 322,989,480 180,356,202 256,433,560

(b) Cash and cash equivalents in statement of cash flows includes:



Cash and cash equivalents of continuing operations 232,414,899 322,989,480 180,356,202 256,433,560

232,414,899 322,989,480 180,356,202 256,433,560

24 Loans and advances to banks



Loans and advances to banks 4,143,427 4,865,065 32,507 178,226

Less specific allowances for impairment - (3) - (3)

Less collective allowances for impairment (9) (238) (9) (238)

4,143,418 4,864,824 32,498 177,985

Current 4,137,168 4,864,824 26,248 177,985

Non-current 6,250 - 6,250 -

198

Notes to financial statements


Reconciliation of allowance accounts for losses on loans and advances to banks

Group


Specific

allowance for

impairment

Collective

allowance for

impairment

Total allowance

for impairment

Specific allowance

for impairment

Collective

allowance for

impairment

Total allowance for

impairment

Balance at 1 January 3 238 241 39,365 160 39,525

Increase in impairment allowances - - - 1 8 9

Reversal of impairment (3) (229) (232) - - -

Reclassifications - - - (39,363) 70 (39,293)

Write offs - - - - - -

- 9 9 3 238 241

Parent


Specific

allowance for

impairment

Collective

allowance for

impairment

Total allowance

for impairment

Specific allowance

for impairment

Collective

allowance for

impairment

Total allowance for

impairment

Balance at 1 January 3 238 241 39,365 160 39,525

Increase in impairment allowances - - - 1 8 9

Reversal of impairment (3) (229) (232) - - -

Reclassifications - - - (39,363) 70 (39,293)

- 9 9 3 238 241

25 Loans and advances to customersGroup

Jun-2013

Gross Specific Portfolio Total Carrying

In thousands of Nigerian Naira amount impairment impairment impairment amount

Loans to individuals 60,418,092 (290,305) (906,428) (1,196,733) 59,221,359

Loans to Non-individuals 854,724,309 (13,929,967) (5,152,725) (19,082,692) 835,641,617

915,142,401 (14,220,272) (6,059,153) (20,279,425) 894,862,976

Group

Dec-2012



Loans to individuals 54,567,237 (901,973) (151,058) (1,053,031) 53,514,206


798,312,303 (15,813,672) (3,448,613) (19,262,285) 779,050,018

Dec-2012Jun-2013

Jun-2013 Dec-2012

199



Parent

Jun-2013



Loans to individuals 46,026,296 - (724,757) (724,757) 45,301,539


865,872,935 (11,957,934) (5,605,409) (17,563,343) 848,309,592

Parent

Dec-2012



Loans to individuals 41,102,736 (594,416) (128,533) (722,949) 40,379,787

Loans to Non-individuals1718,154,307 (12,976,805) (3,120,345) (16,097,150) 702,057,157

759,257,043 (13,571,221) (3,248,878) (16,820,099) 742,436,944 1 Includes loans to corporate entities and other organisations



Current 541,505,859 424,018,577 520,086,067 407,313,799

Non-current 353,357,117 355,031,441 328,223,525 335,123,145

Reconciliation of allowance accounts for losses on loans and advances to INDIVIDUALS

Group


Specific

allowance for

impairment

Collective

allowance for

impairment

Total allowance

for impairment

Specific allowance

for impairment

Collective

allowance for

impairment

Total allowance for

impairment

Balance at 1 January 901,973 151,058 1,053,031 556,597 59,788 616,385

Foreign currency translation and other

adjustments 570 102,729 103,299 (10,780) (764) (11,544)

Increase in impairment allowances 57,854 652,641 710,495 530,387 42,445 572,832

Reversal of impairment (594,382) - (594,382) (145,621) (14,015) (159,636)

Reclassifications - - - 128,175 63,604 191,779

Write offs (75,710) - (75,710) (156,785) - (156,785)

Balance, end of period 290,305 906,428 1,196,733 901,973 151,058 1,053,031

Dec-2012Jun-2013

200



Reconciliation of allowance accounts for losses on loans and advances to INDIVIDUALS

Parent


Specific

allowance for

impairment

Collective

allowance for

impairment

Total allowance

for impairment

Specific allowance

for impairment

Collective

allowance for

impairment

Total allowance for

impairment

Balance at 1 January 594,416 128,533 722,949 556,597 59,788 616,385

Increase in impairment allowances - 596,224 596,224 142,500 5,141 147,641

Reversal of impairment (594,416) - (594,416) (139,312) - (139,312)

Reclassifications - - - 128,175 63,604 191,779

Write offs - - - (93,544) - (93,544)

Balance, end of period - 724,757 724,757 594,416 128,533 722,949

Reconciliation of allowance accounts for losses on Loans to NON - INDIVIDUALS

Group


Specific

allowance for

impairment

Collective

allowance for

impairment

Total allowance

for impairment

Specific allowance

for impairment

Collective

allowance for

impairment

Total allowance for

impairment

Balance at 1 January 14,911,699 3,297,555 18,209,254 16,191,120 9,052,043 25,243,163

Reversal of impairment (1,612,319) - (1,612,319) (978,405) (3,210,935) (4,189,340)

Foreign currency translation and other

adjustments (2,535) 56,809 54,274 (213,475) (12,465) (225,940)

Increase in impairment allowances 1,065,342 1,798,361 2,863,703 3,907,564 1,092,703 5,000,267

Reclassifications (414,599) - (414,599) (3,646,412) (1,179,840) (4,826,252)

Write offs (17,621) - (17,621) (348,693) (2,443,951) (2,792,644)

Balance, end of period 13,929,967 5,152,725 19,082,692 14,911,699 3,297,555 18,209,254

Parent


Specific

allowance for

impairment

Collective

allowance for

impairment

Total allowance

for impairment

Specific allowance

for impairment

Collective

allowance for

impairment

Total allowance for

impairment

Balance at 1 January 12,976,805 3,120,345 16,097,150 16,191,120 6,515,358 22,706,478

Increase in impairment allowances 939,794 1,760,307 2,700,101 2,510,258 961,484 3,471,742

Reversal of impairment (1,544,066) - (1,544,066) (701,956) (3,176,657) (3,878,613)

Reclassifications (414,599) - (414,599) (3,646,412) (1,179,840) (4,826,252)

Write offs - - - (1,376,205) - (1,376,205)

Balance, end of period 11,957,934 4,880,652 16,838,586 12,976,805 3,120,345 16,097,150

Reclassifications relates to reversals done between the 2 classes of impairment for proper presentation. This resulted from movement of in

exposures which were initially assessed under collective impairment in prior year but which were subsequently re-assessed under specific

impairment in the current year. They are not provisions no longer required.

Dec-2012Jun-2013

Jun-2013 Dec-2012

Jun-2013 Dec-2012

201


26 Financial assets held for trading Group Group Parent Parent


Trading bonds (see note 26(b) below) 15,697,244 4,550,387 15,697,244 4,550,387

Trading treasury bills (see note 26(c) below) 15,369,104 266,523,509 11,660,833 262,866,795

31,066,348 271,073,896 27,358,077 267,417,182

Current 22,405,053 271,019,064 18,696,782 267,362,350

Non-current 8,661,295 54,832 8,661,295 54,832

(b) Trading bonds are analysed below:



3rd FGN Bond Series 14 (12.74%) 1,000,000 1,064,137 1,000,000 1,064,137

4th FGN Bond Series 9 (9.35%) 7,168 7,486 7,168 7,486

5th FGN Bond Series 1 (9.45%) - 55,675 - 55,675

5th FGN Bond Series 2 (10.70%) 271,076 - 271,076 -



6th FGN Bond Series 4 (7%) 73,543 - 73,543 -

7th FGN Bond Series 1 (5.5%) - 460 - 460

7th FGN Bond Series 3 (10%) - - - -

7th FGN Bond Series 2 (4.00%) 5,085,316 4 5,085,316 4

8th FGN Bond Series 1 (10.50%) 6,000,000 - 6,000,000 -

9th FGN Bond Series 1 (16.39%) 3,000,000 - 3,000,000 -

9th FGN Bond Series 2 (15.10%) 110,863 - 110,863 -

AMCON Bond - 3,345,657 - 3,345,657

Local Contractor Bond 69,246 - 69,246 -

15,697,244 4,550,387 15,697,244 4,550,387

202


(c) Trading treasury bills is analysed below:



Nigerian treasury bills' maturities:

17-January-2013 - 16,380,175 - 16,380,175

03-January-2013 - 28,727,232 - 28,727,232

31-January-2013 - 26,446,153 - 26,446,153

19-December-2013 1,086,779 1,107,229 1,086,779 1,107,229

14-February-2013 - 6,146,761 - 6,146,761

18-April-2013 - 2,642,295 - 2,642,295

24-January-2013 - 21,256,695 - 21,256,695

28-March-2013 - 16,559,313 - 16,559,313

04-April-2013 - 14,976,205 - 14,976,205

21-February-2013 - 10,585,415 - 10,585,415

06-June-2013 - 262,737 - 262,737

25-April-2013 - 15,525,887 - 15,525,887

08-August-2013 - 232,248 - 232,248

05-December-2013 450,231 200,597 450,231 200,597

10-January-2013 - 5,164,365 - 5,164,365

07-February-2013 - 6,311,208 - 6,311,208

07-March-2013 - 828,021 - 828,021

14-March-2013 - 24,440,891 - 24,440,891

28-February-2013 - 4,929,327 - 4,929,327

27-June-2013 - 31,071 - 31,071

21-March-2013 - 34,517,833 - 34,517,833

11-April-2013 - 25,591,236 - 25,591,236

09-May-2013 - 3,676 - 3,676

23-May-2013 - 225 - 225

04-July-2013 401,373 - 401,373 -

11-July-2013 1,637,966 - 1,637,966 -

18-July-2013 252,359 - 252,359 -

25-July-2013 359,514 - 359,514 -

15-August-2013 14,876 - 14,876 -

29-August-2013 237,843 - 237,843 -

05-September-2013 758,659 - 758,659 -

12-September-2013 243,760 - 243,760 -

19-September-2013 489,033 - 489,033 -

26-September-2013 10,903 - 10,903 -

10-October-2013 1,141,606 - 1,141,606 -

17-October-2013 407,090 - 407,090 -

24-October-2013 67,242 - 67,242 -

31-October-2013 239,212 - 239,212 -

203


07-November-2013 221,394 - 221,394 -

14-November-2013 107,476 - 107,476 -

21-November-2013 219,527 - 219,527 -

28-November-2013 43,363 - 43,363 -

12-December-2013 710,956 - 710,956 -

27-December-2013 382,846 - 382,846 -

23-January-2014 465,121 - 465,121 -

06-February-2014 357,221 - 357,221 -

06-March-2014 227,952 - 227,952 -

10-April-2014 259,479 - 259,479 -

24-April-2014 224,674 - 224,674 -

08-May-2014 416,441 - 416,441 -

22-May-2014 225,937 - 225,937 -

Non-Nigerian treasury bills 3,708,271 3,656,714 - -

15,369,104 266,523,509 11,660,833 262,866,795

27 Investment securities



(i) Available for sale investment securities

Treasury bills 285,127,857 5,622,398 277,205,309 -

Bonds 5,116,925 7,303,799 5,116,925 7,303,799

Equity securities (See note 27(a)(ii) below 4,386,799 - 4,386,799 -

Unquoted equity securities at cost (see note

27(c) below) 5,633,824 6,303,755 5,628,977 6,299,125

300,265,405 19,229,952 292,338,010 13,602,924

Specific impairment for equities (see note 27(b)

below) (3,464,163) (3,464,163) (3,464,163) (3,464,163)

Total available for sale investment securities 296,801,242 15,765,789 288,873,847 10,138,761

Held to maturity investment securities

Bonds 7,473,645 7,896,407 5,101,002 5,308,197

Treasury bills 44,779,407 50,347,387 28,246,466 38,412,656

AMCON bond (see note 27(e) below) 65,928,491 68,527,540 65,928,491 68,527,540

Corporate bond (See note 27(a)(iii) below 2,416,567 2,719,476 2,416,567 6,649,524

Total held to maturity investment securities 120,598,110 129,490,810 101,692,526 118,897,917

Total investment securities 417,399,352 145,256,599 390,566,373 129,036,678

Current 360,206,664 93,189,851 336,421,824 77,049,643

Non-current 57,192,688 52,066,748 54,144,549 51,987,035

204


(ii) Equity securities represents fair value of the Parent's investments in Kakawa and African Finance

Corporation.

(iii) The amount represents the total value of investment in corporate bonds. Of this amount, the sum of N2,400,000,000

(December 2012: 2,700,000,000 ) represents face value of a 5 year 12% Fixed Rate Senior Unsecured Bonds issued by

Flour Mills of Nigeria Plc to the Bank. Included in parent's investment in corporate bonds for the comparative period

is investment in Eurobond issued by GTBV in the sum of N3,930,048,000 (USD 25,162,375).

(b) Specific impairment for equities



Balance at 1 January 3,464,163 2,694,626 3,464,163 2,694,626

- Charge for the period - 769,537 - 769,537

Balance, end of the period 3,464,163 3,464,163 3,464,163 3,464,163

-

(c) Unquoted equity securities at cost relates to the banks investment in SMEEIS and equity investments:

Unquoted equity securities is analysed below:



SMEEIS investment:

- Forrilon Translantic Ltd 1,080,851 1,080,851 1,080,851 1,080,851

- Sokoa Chair Centre 61,288 61,288 61,288 61,288

- TerraKulture ltd 469,999 469,999 469,999 469,999

- Tinapa Business Resort 500,000 500,000 500,000 500,000

- Iscare Nigeria Ltd 40,000 40,000 40,000 40,000

- Ruqayya Integrated Farms 40,500 40,500 40,500 40,500

- National E-Government Strategy 25,000 25,000 25,000 25,000

- Central Securities Clearing System 10,500 10,500 10,500 10,500

- Patrick Speech & Language Centre Ltd 30,000 30,000 30,000 30,000

- Bookcraft Ltd 20,000 20,000 20,000 20,000

- 3 Peat Investment Ltd 1,016,032 1,016,032 1,016,032 1,016,032

- Shonga F.H. Nigeria Ltd 200,000 200,000 200,000 200,000

- Safe Nigeria Ltd 350,000 350,000 350,000 350,000

- CRC Credit Bureau 61,111 61,111 61,111 61,111

- Cards Technology Limited 265,000 265,000 265,000 265,000

- Thisday Events Center 500,000 500,000 500,000 500,000

- HITV Limited 500,000 500,000 500,000 500,000

- SCC Algon Ltd 42,664 42,664 42,664 42,664

Cost of SMIEES investment 5,212,945 5,212,945 5,212,945 5,212,945

Less specific impairment for equities (3,199,962) (3,199,962) (3,199,962) (3,199,962)

Carrying value of SMIEES investment 2,012,983 2,012,983 2,012,983 2,012,983

205


Other unquoted equity investment:

- Kakawa Discount House Limited1- 34,100 - 34,100

- Unified Payment Services Limited290,153 90,153 90,153 90,153

- Nigeria Automated Clearing Systems 47,547 47,547 47,547 47,547

- Afrexim 14,131 14,131 14,131 14,131

- ICHL Nigeria Limited 264,201 264,201 264,201 264,201

- GIM UEMOA 4,847 4,630 - -

- Africa Finance Corporation1- 636,048 - 636,048

Cost of other unquoted equity investment 420,879 1,090,810 416,032 1,086,180

Less specific impairment for equities (264,201) (264,201) (264,201) (264,201)

Carrying value of other unquoted equity investment 156,678 826,609 151,831 821,979

Total cost of unquoted equity investment 5,633,824 6,303,755 5,628,977 6,299,125

Total impairment of unquoted equity investment (3,464,163) (3,464,163) (3,464,163) (3,464,163)

Total carrying value of unquoted equity investment 2,169,661 2,839,592 2,164,814 2,834,962

1 Kakawa Discount House Limited and Africa Finance Corporation recognised as unquoted investments

as unquoted equity securities in prior year have been recognised as equity securities at fair value in current period.2 Unified Payment Services Limited was formerly known as Valucard Nigeria Plc.

Fair value information for SMEEIS and Other long term investments has not been disclosed because their fair values

cannot be measured reliably. They have been disclosed at cost less impairment. The carrying amount thus disclosed

is the expected recoverable amounts on these investments

There are no active market for these financial instruments, fair value information are therefore not available, this

makes it impracticable for the Group to fair value these investments. The Group investments in these entities are

borne out of regulatory requirement in force as at the time of investment, this regulatory requirement however has

been abolished. The Group is willing to divest from these entities if willing buyers come across and upon obtaining

appropriate regulatory approvals; in the meantime, the Group would continue to carry these investments at Cost

less impairment value.

The Group neither controls nor significantly influences the above SMEEIS and other long term investments because

of the following:

• There are no material transactions between the Group and the entities.

• The Group does not provide essential technical information to the entities.

• There is no inter-change of personnel between the Group and the entities.

• Although the Group is represented in some of the boards, these representations do not connote any form of control

or significant influence because most of the entities do not hold regular board meetings and are run like sole

proprietorship businesses.

• Owing to the nature of the entities business, the Group does not participate in their policy making processes.

(e) (i) The AMCON bonds comprise:



Face value 73,563,580 81,484,586 73,563,580 81,484,586

Unearned interest (7,635,089) (12,957,046) (7,635,089) (12,957,046)

65,928,491 68,527,540 65,928,491 68,527,540

(ii) This represents consideration bonds issued by the Asset Management Corporation of Nigeria (AMCON) and fully

guaranteed by the Federal Government of Nigeria. The Consideration bonds were issued to banks in exchange for

non-performing loans.

206


28 Assets pledged as collateral

(a) Group Group Parent Parent


Financial assets held for trading (See note 28(c)

below): - 16,461,583 - 16,461,583

- Treasury bills - 12,668,211 - 12,668,211

- Bonds - 3,793,372 - 3,793,372

Investment Securities - available for sale (See

note (d) below): 11,622,957 - 11,622,957 -

- Treasury bills 11,622,957 - 11,622,957 -

Investment Securities - held to maturity (See

note 28(e) below): 15,906,151 14,741,647 15,906,151 14,741,647

- Treasury bills 15,906,151 14,741,647 15,906,151 14,741,647

27,529,108 31,203,230 27,529,108 31,203,230

Current 27,529,108 31,203,230 27,529,108 31,203,230

(b) Included in Assets pledged as collateral for comparative period are bonds held on Repurchase agreements (REPO) basis

N3,793,372,000.

(c) Bonds and Treasury Bills pledged as collateral of nil (December 2012: N16,461,583,000) have been

reclassified from financial assets held for trading at fair value.

(d) Treasury Bills pledged as collateral of N11,622,957,000 (December 2012: nil) have been

reclassified from investment securities - available for sale at fair value.

(e) Treasury Bills pledged as collateral of N15,906,151,000 (December 2012: N14,741,647,000) have been

reclassified from investment securities at amortised cost.

207


29 Investment in subsidiaries

(a) Investment in subsidiaries comprises:

Parent Parent


GTB Gambia 574,278 574,278

GTB Sierra Leone 594,109 594,109

GTB Ghana 8,572,446 8,498,732

GTB Finance B.V. 3,220 3,220

GTB UK Limited 7,822,427 7,822,427

GTB Liberia Limited 1,947,264 1,947,264

GTB Cote D'Ivoire Limited 3,485,058 3,485,058

22,998,802 22,925,088

Non-current 22,998,802 22,925,088

208


(a) (i) The movement in investment in subsidiaries during the period is as follows:

Parent Parent


Balance, beginning of the period 22,925,088 16,233,581

Additions during the period 73,714 6,691,507

Balance, end of the period 22,998,802 22,925,088

209


Condensed results of consolidated entities

(a) Condensed results of the consolidated entities as at 30 June 2013, are as follows:

Condensed profit and loss

Jun-2013

In thousands of Nigerian Naira Group balance

Elimination

Entries GTBank Plc SIT

GTB Finance

B.V.

GT Bank

Ghana

GT Bank

Sierra Leone

GT Bank

Liberia GT Bank UK

GT Bank

Gambia

GT Bank Cote

D'Ivoire

Operating income 100,250,929 (937,379) 92,909,064 (38,536) - 4,537,791 1,310,145 606,590 980,415 815,694 67,145

Operating expenses (41,568,910) (4) (37,362,376) 452,833 - (1,951,766) (692,936) (404,349) (959,801) (425,107) (225,404)

Loan impairment charges (1,317,532) 2 (1,107,877) - - (62,875) (75,422) (25,927) - (45,432) (1)

Profit before tax from continuing

operations 57,364,487 (937,381) 54,438,811 414,297 - 2,523,150 541,787 176,314 20,614 345,155 (158,260)

Taxation (8,349,626) 2 (7,326,577) - - (726,149) (162,536) (20,464) - (113,901) (1)

Profit after tax from continuing

operations 49,014,861 (937,379) 47,112,234 414,297 - 1,797,001 379,251 155,850 20,614 231,254 (158,261)

Profit after tax from discontinued

operations - - - - - - - - - - -

Profit after tax 49,014,861 (937,379) 47,112,234 414,297 - 1,797,001 379,251 155,850 20,614 231,254 (158,261)

210


Condensed financial position

Jun-2013


Elimination


GTB Finance

B.V.

GT Bank

Ghana

GT Bank

Sierra Leone

GT Bank

Liberia GT Bank UK

GT Bank

Gambia

GT Bank Cote

D'Ivoire

Assets

Cash and cash equivalents 232,414,899 (13,926,300) 180,356,202 70,305 - 13,240,839 5,388,225 3,847,303 38,679,095 3,570,870 1,188,360

Loans and advances to banks 4,143,418 - 32,498 - - - - - 4,041,114 - 69,806

Loans and advances to customers 894,862,976 (82,186,085) 848,309,592 - 81,298,245 26,543,974 4,897,024 3,532,394 7,199,494 4,952,835 315,503

Financial assets held for trading 31,066,348 - 27,358,077 - - - - - - 3,708,271 -

Investment securities: - -

– Available for sale 296,801,242 (2,046,714) 288,873,847 2,046,714 - - 3,764,489 - 4,158,059 - 4,847

– Held to maturity 120,598,110 - 101,692,526 - - 17,101,964 - 124,245 - - 1,679,375

Investment in subsidiaries - (22,998,802) 22,998,802 - - - - - - - -

Assets pledged as collateral 27,529,108 - 27,529,108 - - - - - - - -

Investment properties - - - - - - - - - - -

Property and equipment 63,737,475 3 58,069,741 - - 2,095,745 1,004,597 689,095 479,029 779,092 620,173

Intangible assets 2,403,549 50,923 2,052,665 - - 140,207 402 19,033 37,870 - 102,449

Deferred tax assets 863,887 568,638 - - - 64,095 - - 231,154 - -

Other assets 186,073,392 (384,955) 179,283,124 - 1,222,168 2,423,177 879,774 1,808,684 225,218 466,437 149,765

Total assets 1,860,494,404 (120,923,292) 1,736,556,182 2,117,019 82,520,413 61,610,001 15,934,511 10,020,754 55,051,033 13,477,505 4,130,278

Financed by:

Deposits from banks 17,657,973 (11,949,954) 1,430,966 - - 2,951,457 115 - 25,225,389 - -

Deposits from customers 1,254,445,308 (500,898) 1,158,421,656 - - 42,412,363 13,105,310 6,849,331 22,009,590 11,248,745 899,211

Debt securities issued 94,007,480 - 13,228,726 - 80,778,754 - - - - - -

Current income tax liabilities 11,963,123 - 11,732,712 - - (40,713) 197,482 7,977 - 65,665 -

Deferred tax liabilities 5,817,448 - 5,670,120 - - 120,096 1,412 - 25,820 - -

Other liabilities 89,462,161 (384,958) 77,054,502 7,126,099 794,857 2,328,742 373,763 843,783 397,122 601,421 326,830

Other borrowed funds 90,191,530 (83,661,533) 169,879,450 1,407,331 - 1,090,834 - - 1,475,448 - -

Total liabilities 1,563,545,023 (96,497,343) 1,437,418,132 8,533,430 81,573,611 48,862,779 13,678,082 7,701,091 49,133,369 11,915,831 1,226,041

Equity and reserve 296,949,381 (24,425,949) 299,138,050 (6,416,411) 946,802 12,747,222 2,256,429 2,319,663 5,917,664 1,561,674 2,904,237

1,860,494,404 (120,923,292) 1,736,556,182 2,117,019 82,520,413 61,610,001 15,934,511 10,020,754 55,051,033 13,477,505 4,130,278

211


Condensed cash flow

Jun-2013


Elimination


GTB Finance

B.V.

GT Bank

Ghana

GT Bank

Sierra Leone

GT Bank

Liberia GT Bank UK

GT Bank

Gambia

GT Bank Cote

D'Ivoire

Net cash flow:

- from operating activities 220,393,908 3,135,962 222,801,987 197,779 (382) (1,804,996) 336,391 709,369 (6,990,850) 1,854,672 153,976

- from investing activities (276,905,211) (4,829,265) (264,590,847) - - (3,706,243) (487,454) (175,667) (1,974,019) (126,696) (1,015,019)

- from financing activities (37,113,282) 1,656,985 (37,851,477) (180,386) (1,099) (737,305) - - (0) - -

Increase in cash and cash

equivalents (93,624,585) (36,317) (79,640,337) 17,393 (1,481) (6,248,544) (151,062) 533,701 (8,964,870) 1,727,975 (861,044)

Cash balance, beginning of period 322,989,479 (14,814,518) 256,433,560 50,354 1,423 19,660,699 5,353,867 3,208,379 49,242,650 1,863,876 1,989,189

Effect of exchange difference 3,050,005 924,535 3,562,979 2,558 58 (171,316) 185,420 105,223 (1,598,685) (20,981) 60,215

Cash balance, end of period 232,414,899 (13,926,300) 180,356,202 70,305 0 13,240,839 5,388,225 3,847,303 38,679,095 3,570,870 1,188,360

212


(b) Condensed results of the consolidated entities as at 30 June 2012, are as follows: -

-

Jun-2012


Elimination


GT Homes

Ltd

GTB Finance

B.V.

GT Bank

Ghana

GT Bank

Sierra Leone

GT Bank

Liberia GT Bank UK

GT Bank

Gambia

GT Bank Cote

D'Ivoire

Condensed profit and loss

Operating income 93,957,979 (497,306) 87,697,863 (37,816) - - 3,701,608 1,024,286 506,606 784,834 684,475 93,429

Operating expenses (37,911,032) (3) (33,142,681) (705,352) - - (1,841,398) (579,661) (363,069) (778,480) (411,038) (89,350)

Loan impairment charges (2,410,863) 2 (1,707,356) - - - (513,450) (150,901) (27,109) - (12,048) (1)

Profit before tax from continuing

operations 53,636,084 (497,307) 52,847,826 (743,168) - - 1,346,760 293,724 116,428 6,354 261,389 4,078

Taxation (8,693,445) 1 (8,141,325) - - - (364,298) (88,113) (13,455) - (86,254) (1)

Profit after tax from continuing

operations 44,942,639 (497,306) 44,706,501 (743,168) - - 982,462 205,611 102,973 6,354 175,135 4,077

Profit after tax from discontinued

operations 609,077 609,077 - - - - - - - - - -

Profit after tax 45,551,716 111,771 44,706,501 (743,168) - - 982,462 205,611 102,973 6,354 175,135 4,077

213


Condensed results of the consolidated entities as at 31 December 2012, are as follows:

Dec-2012


Elimination


GT Homes

Ltd

GTB Finance

B.V.

GT Bank

Ghana

GT Bank

Sierra Leone

GT Bank

Liberia GT Bank UK

GT Bank

Gambia

GT Bank Cote

D'Ivoire

Condensed financial position

Assets

Cash and cash equivalents 322,989,480 (14,814,517) 256,433,560 50,354 - 1,423 19,660,699 5,353,867 3,208,379 49,242,650 1,863,876 1,989,189

Loans and advances to banks 4,864,824 - 177,985 - - - - - - 4,686,839 - -

Loans and advances to customers 779,050,018 (79,205,702) 742,436,944 - - 77,992,985 20,062,511 3,839,654 3,333,005 6,332,848 4,071,772 186,001

Financial assets held for trading 271,073,896 - 267,417,182 - - - - - - - 3,656,714 -

Hedging derivatives - - - - - - - - - - - -

Investment securities: - - - - - - - - - - - -

– Available for sale 15,765,789 (2,046,714) 10,138,761 2,046,714 - - - 3,304,134 - 2,318,264 - 4,630

– Loans and receivables - - - - - - - - - - - -

– Held to maturity 129,490,810 (3,930,048) 118,897,917 - - - 13,887,947 - - - - 634,994

Investment in subsidiaries - (22,925,088) 22,925,088 - - - - - - - - -

Assets pledged as collateral 31,203,230 - 31,203,230 - - - - - - - - -

Investment properties - - - - - - - - - - - -

Property and equipment 60,886,728 2 55,496,808 - - - 1,969,697 846,779 642,907 501,507 751,561 677,467

Intangible assets 1,772,176 50,922 1,539,717 - - - 107,626 685 28,731 44,495 - -

Deferred tax assets 991,791 812,032 - - - - - - - 179,759 - -

Other assets 116,789,118 (93,250) 113,650,031 - - 388 662,278 338,470 1,607,905 216,168 302,218 104,910

1,734,877,860 (122,152,363) 1,620,317,223 2,097,068 - 77,994,796 56,350,758 13,683,589 8,820,927 63,522,530 10,646,141 3,597,191

Assets classified as held for sale

and discontinued operations - - - - - - - - - - - -

Total assets 1,734,877,860 (122,152,363) 1,620,317,223 2,097,068 - 77,994,796 56,350,758 13,683,589 8,820,927 63,522,530 10,646,141 3,597,191

Financed by:

Deposits from banks 23,860,259 (12,808,683) 7,170,321 - - - 3,322,186 761 - 26,175,674 - -

Deposits from customers 1,148,197,165 (480,290) 1,054,122,573 - - - 39,306,669 10,969,114 5,641,214 29,517,782 8,809,434 310,669

Debt securities issued 86,926,227 (3,930,048) 13,238,291 - - 77,617,984 - - - - - -

Current income tax liabilities 15,630,973 - 15,340,116 - - - 86,106 167,088 5,343 - 32,320 -

Deferred tax liabilities 3,288,196 (1) 3,225,418 - - - 30,502 5,350 - 26,927 - -

Other liabilities 80,972,096 (93,247) 69,872,456 7,340,059 - 74,989 1,172,145 754,549 1,024,717 240,966 192,786 392,676

Other borrowed funds 92,561,824 (80,731,248) 169,194,418 1,587,717 - - 985,390 - - 1,525,547 - -

1,451,436,740 (98,043,517) 1,332,163,593 8,927,776 - 77,692,973 44,902,998 11,896,862 6,671,274 57,486,896 9,034,540 703,345

Liabilities included in assets

classified as held for sale and

discontinued operations - - - - - - - - - - - -

Total liabilities 1,451,436,740 (98,043,517) 1,332,163,593 8,927,776 - 77,692,973 44,902,998 11,896,862 6,671,274 57,486,896 9,034,540 703,345

Equity and reserve 283,441,120 (24,108,846) 288,153,630 (6,830,708) - 301,823 11,447,760 1,786,727 2,149,653 6,035,634 1,611,601 2,893,846

1,734,877,860 (122,152,363) 1,620,317,223 2,097,068 - 77,994,796 56,350,758 13,683,589 8,820,927 63,522,530 10,646,141 3,597,191

214


Jun-2012


Elimination


GT Homes

Ltd

GTB Finance

B.V.

GT Bank

Ghana

GT Bank

Sierra Leone

GT Bank

Liberia GT Bank UK

GT Bank

Gambia

GT Bank Cote

D'Ivoire

Condensed cash flow

Net cash flow:

- from operating activities 15,321,246 (52,332,928) (10,524,477) 67,459 (3,971,316) 56,844,989 14,499,674 (380,474) 715,680 9,994,206 408,434 2,880,114

- from investing activities (14,838,912) (10,323,857) 4,305,473 - 2,886,708 - (8,908,783) 781,842 668,947 (4,542,871) 293,629 (107,557)

- from financing activities (80,588,589) 53,856,578 (79,678,777) (55,008) - (56,844,320) (772,838) (159,254) - 3,065,030 - -

Increase in cash and cash

equivalents (80,106,255) (8,800,206) (85,897,781) 12,451 (1,084,608) 669 4,818,052 242,114 1,384,627 8,516,365 702,063 2,772,557

Cash balance, beginning of period 369,105,220 (16,753,731) 330,294,424 36,568 1,084,608 801 10,782,179 4,321,701 1,988,686 36,225,186 1,124,798 -

Effect of exchange difference 388,659 (1,040,485) 1,493,645 - - 13 (1,164,679) 101,603 22,205 886,589 89,767 -

Cash balance, end of period 289,387,624 (26,594,422) 245,890,288 49,019 - 1,483 14,435,552 4,665,418 3,395,518 45,628,140 1,916,628 2,772,557

215



30 Property and equipment(a) Group

Leasehold Other Capital

In thousands of Nigerian Naira improvement Furniture & Motor transport work-in Total

and buildings Land1 equipment vehicle equipment - progress

Cost

Balance at 1 January 2013 30,944,183 8,041,110 36,223,462 6,791,431 4,113,773 8,295,478 94,409,437

Exchange difference 32,611 (13,006) 8,348 5,815 - 5,674 39,442

Additions 1,043,883 159,441 1,804,391 856,674 - 3,385,300 7,249,689

Disposals (40) (107,374) (165,140) (481,880) - (76,803) (831,237)

Transfers 425,143 60,900 393,957 - - (880,000) -

Reclassifications from other assets - - 6,060 - - 359,169 365,229

Balance at 30 June 2013 32,445,780 8,141,071 38,271,078 7,172,040 4,113,773 11,088,818 101,232,560


Exchange difference (242,927) (85,569) (202,312) (54,339) - (16,460) (601,607)

Additions 2,356,335 182,036 5,970,589 1,123,912 - 5,296,576 14,929,448

Disposals (1,742,815) - (82,382) (1,109,436) - (1,673,797) (4,608,430)

Transfers 1,194,327 1,591,041 501,065 - - (3,286,433) -

Balance at 31 December 2012 30,944,183 8,041,110 36,223,462 6,791,431 4,113,773 8,295,478 94,409,437

Capital work in progess refers to capital expenditure incurred on items of Property, Plant and Equipment which are however not ready for use and as such

are not being depreciated.

216



Property and equipment (continued)Group

Depreciation Leasehold Other Capital



Balance at 1 January 2013 4,022,731 538,069 22,939,717 4,389,515 1,632,677 - 33,522,709

Exchange difference 3,876 (888) 1,181 7,051 - - 11,220

Charge for the period 766,502 47,259 2,912,487 550,838 244,042 - 4,521,128

Disposal - (107,374) (38,699) (413,899) - - (559,972)

Balance at 30 June 2013 4,793,109 477,066 25,814,686 4,533,505 1,876,719 - 37,495,085


Exchange difference (22,651) (5,370) (117,500) (26,530) - - (172,051)

Charge for the period 1,227,299 98,187 5,523,068 1,362,758 327,965 - 8,539,277

Disposal (950,544) - (61,274) (1,012,103) - - (2,023,921)

Balance at 31 December 2012 4,022,731 538,069 22,939,717 4,389,515 1,632,677 - 33,522,709

Carrying amounts:

Balance at 30 June 2013 27,652,671 7,664,005 12,456,392 2,638,535 2,237,054 11,088,818 63,737,475


217



Property and equipment (continued)(b) Parent

Leasehold Other Capital



Cost


Additions 907,214 160,000 1,564,130 650,981 - 3,157,313 6,439,638

Disposals (40) (107,374) (20,644) (436,248) - - (564,306)

Transfers 425,143 60,900 393,957 - - (880,000) -

Reclassifications from other assets - - 6,060 - - 359,169 365,229

Balance at 30 June 2013 28,929,850 7,383,540 35,088,625 6,178,323 4,113,773 10,556,482 92,250,593


Exchange difference - - - - - - -

Additions 1,924,200 159,050 5,021,799 917,424 - 5,103,598 13,126,071

Disposals (1,742,815) - (66,022) (1,051,174) - (1,600,000) (4,460,011)

Transfers 1,194,327 1,591,041 501,065 - - (3,286,433) -


218



Property and equipment (continued)Parent

Depreciation Leasehold Other Capital




Charge for the period 667,082 48,176 2,648,043 556,143 244,042 - 4,163,486

Disposal - (107,374) (19,985) (368,499) - - (495,858)

Balance at 30 June 2013 4,171,076 392,719 23,678,154 4,062,184 1,876,719 - 34,180,852


Exchange difference - - - - - - -

Charge for the period 1,080,068 84,032 4,922,446 1,220,471 327,965 - 7,634,982

Disposal (950,544) - (50,488) (970,468) - - (1,971,500)

Balance at 31 December 2012 3,503,994 451,917 21,050,096 3,874,540 1,632,677 - 30,513,224

Carrying amounts:

Balance at 30 June 2013 24,758,774 6,990,821 11,410,471 2,116,139 2,237,054 10,556,482 58,069,741


(c) The Bank had capital commitments of N1,017,750,000 (31 December 2012: N1,008,604,000) as at the reporting date in respect of authorized and contractual

capital projects.

(d) There were no capitalised borrowing costs related to the acquisition of plant and equipment during the year (2013: nil)

219


31 Intangible assets (a) Group

Purchased

In thousands of Nigerian Naira Goodwill Software Total

Cost

Balance at 1 January 2013 50,923 5,608,778 5,659,701

Exchange translation differences - 7,126 7,126

Additions - 1,009,534 1,009,534

Balance at 30 June 2013 50,923 6,625,438 6,676,361

Balance at 1 January 2012 50,923 4,499,395 4,550,318

Exchange translation differences - (31,599) (31,599)

Additions - 1,140,982 1,140,982

Balance at 31 December 2012 50,923 5,608,778 5,659,701

Amortization and impairment losses

Balance at 1 January 2013 - 3,887,525 3,887,525

Exchange translation differences - 3,884 3,884

Amortization for the period - 381,403 381,403

Balance at 30 June 2013 - 4,272,812 4,272,812

Balance at 1 January 2012 - 3,543,848 3,543,848

Exchange translation differences - (8,842) (8,842)

Amortization for the period - 352,519 352,519

Balance at 31 December 2012 - 3,887,525 3,887,525

Carrying amounts

Balance at 30 June 2013 50,923 2,352,626 2,403,549

Balance at 31 December 2012 50,923 1,721,253 1,772,176

Goodwill is revised annually for impairment, or more frequently when there are indications that impairment

may have occurred. There was no impairment identified in the period ended June 2013 (2012: nil).

220


(b) Parent

Purchased

In thousands of Nigerian Naira Software

Cost

Balance at 1 January 2013 5,277,464

Additions 808,146

Balance at 30 June 2013 6,085,610


Additions 1,194,769

Balance at 31 December 2012 5,277,464

Amortization and impairment losses


Amortization for the period 295,198

Balance at 30 June 2013 4,032,945


Amortization for the period 417,761


Carrying amounts

Balance at 30 June 2013 2,052,665


221


222

Impairment testing for cash-generating units containing Goodwill

For the purpose of impairment testing, goodwill acquired through business combinations is allocated to the Group’s operating segments, which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes.


No impairment loss on goodwill was recognised during the period ended 30 June 2013 (2012: nil).

The recoverable amounts for the CGUs have been determined based on value-in-use calculations; using cash flow projections based on financial budgets approved by senior management covering a five-year period.

The calculation of the value in use was based on the following key assumptions:

• Cash flows were projected based on past experience, actual operating results and the 5-year business plan in both 2012 and 2013. Cash flows for a further 5 year using a constant growth rate of 9 per cent were extrapolated for the two financial periods. This constant growth rate is based on the long term forecast GTBank’s growth rate in the countries in which the CGU’s operates. The forecast period is based on the Group’s medium to long term perspective with respect to the operations of these units.

• Pre-tax discount rates of 18% and 16% (2012: 18% and 16%) respectively were applied in determining the recoverable amounts for Corporate banking and Retail banking. These discount rates were estimated based on past experience, inflation rate, risk-free rate and the weighted average cost of capital allocated by the Group to these units.

• Interest margins were based on actual interest margins of 41% and 74% (2012: 40% and 75%) respectively for Corporate banking and Retail banking.

The key assumptions described above may change as economic and market conditions change. The Group estimates that reasonably possible changes in these assumptions are not expected to cause the recoverable amount of the subsidiaries (from which the goodwill arose) to decline below their carrying amount.

Operating segment Jun 2013 Dec 2012

Corporate banking 40,738 40,738 Retail banking 10,185 10,185 50,923 50,923



32 Deferred tax assets and liabilitiesDeferred tax assets and liabilities are attributable to the following:

Group

Deferred tax assets


Assets Liabilities Net Assets Liabilities Net

Property and equipment, and software 231,154 - 231,154 179,759 - 179,759

Allowances for loan losses 64,095 - 64,095 - - -

Other assets - - - 812,032 - 812,032

Foreign currency translation difference 568,638 - 568,638 - - -

Net deferred tax assets/(liabilities) 863,887 - 863,887 991,791 - 991,791


Deferred tax assets

-Deferred tax assets to be recovered within 12 months 632,733 812,032

-Deferred tax assets to be recovered after more than 12 months 231,154 179,759

Deferred tax liabilities

-Deferred tax liabilities to be recovered within 12 months - -

223



Group




Property and equipment, and software - 5,872,321 5,872,321 - 5,056,628 5,056,628

Fair value reserves 1,174,601 - (1,174,601) - 72,689 72,689

Allowances for loan losses - 658,163 658,163 2,832,792 - (2,832,792)

Mark to market loss on valuation of securities - 46,126 46,126 108,779 - (108,779)

Defined benefit obligation - 1,392,665 1,392,665 - 1,393,022 1,393,022

Other assets 1,068,893 91,667 (977,226) 292,572 - (292,572)

Foreign currency translation difference - - - - - -

Net deferred tax assets/(liabilities) 2,243,494 8,060,942 5,817,448 3,234,143 6,522,339 3,288,196


Deferred tax assets

-Deferred tax assets to be recovered within 12 months 2,243,494 3,234,143


-Deferred tax liabilities to be recovered within 12 months 2,188,621 1,465,711

-Deferred tax liabilities to be recovered after more than 12 months 5,872,321 5,056,628

224



Parent

Deferred Tax Liabilities



Property and equipment, and software - 5,700,571 5,700,571 - 4,974,376 4,974,376

Fair value reserves 1,174,601 - (1,174,601) - 72,689 72,689

Allowances for loan losses - 673,462 673,462 2,822,084 - (2,822,084)

Mark to market loss on valuation of securities - 46,126 46,126 108,779 - (108,779)

Defined benefit obligation - 1,401,788 1,401,788 - 1,401,788 1,401,788

Other assets 1,068,893 91,667 (977,226) 292,572 - (292,572)

Net deferred tax assets/(liabilities) 2,243,494 7,913,614 5,670,120 3,223,435 6,448,853 3,225,418


Deferred tax assets

-Deferred tax assets to be recovered within 12 months 2,243,494 3,223,435


-Deferred tax liabilities to be recovered within 12 months 2,213,043 1,474,477

-Deferred tax liabilities to be recovered after more than 12 months 5,700,571 4,974,376

225



Deferred tax assets and liabilities

Movements in temporary differences during the period

Group

Jun-2013

Balance at Exchange Recognised in Asset Balance at

In thousands of Nigerian Naira Jan-2013 Difference Profit or loss Other classified as Jun-2013

comprehensive as held for sale

income

Property and equipment, and software 4,973,419 (76,763) 783,399 - - 5,680,055

Fair value reserves 72,689 64,132 (2,161,312) 914,971 - (1,109,520)

Allowances for loan losses (2,929,342) (56,529) 3,528,175 - - 542,304

Mark to market loss on valuation of securities (108,779) (128,071) 154,905 - - (81,945)

Defined benefit obligation 1,393,022 - - - - 1,393,022

Other assets (352,390) (30,000) (684,654) - - (1,067,044)

Foreign currency translation difference (752,214) - - 348,903 - (403,311)

2,296,405 (227,231) 1,620,513 1,263,874 - 4,953,561

Group

Dec-2012

Balance at Exchange Recognised in Balance at

In thousands of Nigerian Naira Jan-2012 Difference Profit or loss Other Dec-2012

comprehensive

income

Property and equipment, and software 5,904,781 (46,115) (981,797) - 4,876,869

Fair value reserves (790,890) - 424,624 438,955 72,689

Allowances for loan losses (2,733,598) (10,708) (88,486) - (2,832,792)

Mark to market loss on valuation of securities 3,443 (3,443) (108,779) - (108,779)

Defined benefit obligation 1,315,560 (8,766) 86,228 - 1,393,022

Other assets (448,282) 41,713 54,179 - (352,390)

Foreign currency translation difference 59,818 - - (812,032) (752,214)

3,310,832 (27,319) (614,031) (373,077) 2,296,405

226



Parent

Jun-2013

Balance at Recognised in Balance at

In thousands of Nigerian Naira Jan-2013 Profit or loss Other Jun-2013

comprehensive

income

Property and equipment, and software 4,974,376 726,195 - 5,700,571

Fair value reserves 72,689 (2,161,312) 914,022 (1,174,601)

Allowances for loan losses (2,822,084) 3,495,546 - 673,462

Mark to market loss on valuation of securities (108,779) 154,905 - 46,126

Defined benefit obligation 1,401,788 - - 1,401,788

Other assets (292,572) (684,654) - (977,226)

3,225,418 1,530,680 914,022 5,670,120

Parent

Dec-2012

Balance at Recognised in Balance at

In thousands of Nigerian Naira Jan-2012 Profit or loss Other Dec-2012

comprehensive

income

Property and equipment, and software 5,804,419 (830,043) - 4,974,376

Fair value reserves (790,890) 484,442 379,137 72,689

Allowances for loan losses (2,733,598) (88,486) - (2,822,084)

Mark to market loss on valuation of securities - (108,779) - (108,779)

Defined benefit obligation 1,315,560 86,228 - 1,401,788

Other assets (286,934) (5,638) - (292,572)

3,308,557 (462,276) 379,137 3,225,418

227



33 Other assets



Prepayments 23,896,956 13,899,474 18,540,216 11,989,457

Foreign Banks - Cash Collateral 44,037,936 - 43,992,950 -

Restricted deposits with central banks 113,771,428 99,198,633 112,382,886 97,969,563

Recognised assets for defined benefit

obligations (See note 39) 4,672,628 4,672,628 4,672,628 4,672,628

186,378,948 117,770,735 179,588,680 114,631,648

Impairment on other assets (305,556) (981,617) (305,556) (981,617)

186,073,392 116,789,118 179,283,124 113,650,031

Current 132,991,709 98,170,212 132,774,900 97,012,091

Non-current 53,081,683 18,618,906 46,508,224 16,637,940

Restricted deposits with central banks are not available for use in the Group’s day-to-day operations. The Bank had

restricted balances of N112,382,886,000 with the Central Bank of Nigeria (CBN) as at 30th June 2013 (December 2012:

N97,969,563,000). This balance is CBN cash reserve requirement. The cash reserve ratio represents a mandatory 12%

(December 2012: 12%) of local deposit which should be held with the Central Bank of Nigeria as a regulatory requirement.

GTB Liberia and Cote d'ivoire had restricted balances of N1,356,549,000 and N31,993,000 respectively with the Central Bank of

Liberia and the BCEAO as at June 2013 (December 2012: N1,198,511,000 and N30,558,000). The Cash Reserve Ratio in Liberia

and Cote divoire represents a mandatory 22% and 5% (December 2012: 22% and 5%) of local deposit which should be held

with the Central Bank of Liberia and the BCEAO as a regulatory requirement.

Movement in impairment of other assets:



Opening Balance 981,617 960,671 981,617 960,671

Charge for the period - 20,946 - 20,946

Write off (676,061) - (676,061) -

Closing Balance 305,556 981,617 305,556 981,617

228



34 Assets classified as held for sale and discontinued operationsGroup Group Parent Parent


Net cash flow from operating activities - 2,249,804 - -

Net cash flow from investing activities - 244,473 - -

- 2,494,277 - -

Included in cash flow from investment activities for 2012 is cash inflow and outflow in the sum of N268,284,000 and N31,983,000

disposal and purchase of investment properties respectively.

(a) Profit from discontinued operations



Revenues - 653,126 - -

Expenses - (455,089) - -

Profit before tax of discontinued operations - 198,037 - -

Tax - - - -

Profit from discontinued operations after tax - 198,037 - -

Gains on disposal of disposal group 34(c) - 411,040 - -

Gains from discontinued operations - 609,077 - -

Pre–tax loss recognised on the

remeasurement of assets of disposal group - - - -

Tax - - - - After tax loss recognised on the

remeasurement of assets of disposal group - - - -

Profit from discontinued operations - 609,077 - -


Equity holders of the parent entity (total) - 559,780 - -

Non-controlling interests (total) - 49,297 - -

- 609,077 - -

Disposal of Businesses

(i)The Group disposed of its investment in GTHomes Limited in May 2012. This disposal is in line with the Central Bank of

Nigeria Regulation on the Scope of Banking Activities and Ancillary Matters. The regulation requires banks to either

set up a holding company structure or divest from all non-banking businesses and apply for a new type of banking license.

229



GTHomes

Limited

In thousands of Nigerian Naira May-2012

Cash and cash equivalents 3,775,711

Loans and advances to customers 5,078,168

Investment properties 2,601,153

Property and equipment 40,730

Deferred tax assets 386,018

Other assets 173,606

Total assets 12,055,386

Deposits from customers 7,567,216

Current income tax liabilities 65,947

Other liabilities 309,494

Total liabilities 7,942,657

Net assets 4,112,729

Non controlling interest disposed of 1,023,769

Net assets less non-controlling interests disposed of 3,088,960

Net sale proceeds on disposal 3,500,000

Profit on Sale 411,040

Net cash inflow arising on disposal:

Cash consideration received 3,500,000

Cash paid to sell subsidiaries -

Net sale proceeds on disposal 3,500,000

Cash and cash equivalents disposed (3,775,711)

(275,711)

Cash flow:

- Cash inflow on disposal of subsidiaries 3,500,000

- Cash outflow on disposal of subsidiaries (3,775,711)

230



35 Deposits from banksGroup Group Parent Parent


Money market deposits 2,951,749 7,009,720 293 3,687,535

Other deposits from banks 14,706,224 16,850,539 1,430,673 3,482,786

17,657,973 23,860,259 1,430,966 7,170,321

Current 17,657,973 23,860,259 1,430,966 7,170,321

Included in money market deposits for comparative period are inter-bank takings of N3,687,535,000 secured by treasury

bills and/or bonds of N3,793,372,000 which have been included in assets pledged as collateral (see Note 28). These

transactions have been conducted under terms that are usual and customary to standard lending and repurchase activities.

36 Deposits from customersGroup Group Parent Parent


Retail customers:

Term deposits 182,611,764 172,773,521 180,486,286 170,674,252

Current deposits 337,191,490 270,059,731 312,001,277 255,484,673

Savings 202,601,991 187,845,990 182,012,003 160,880,989

Corporate customers:

Term deposits 145,614,131 156,401,620 129,568,637 136,191,195

Current deposits 386,425,932 361,116,303 354,353,453 330,891,464

1,254,445,308 1,148,197,165 1,158,421,656 1,054,122,573

Current 1,249,750,879 1,143,820,898 1,158,421,656 1,054,021,631

Non-current 4,694,429 4,376,267 - 100,942

231



37 Debt securities issuedGroup Group Parent Parent


Debt securities at amortized cost:

Eurobond debt security 80,778,754 73,687,936 - -

Corporate bonds 13,228,726 13,238,291 13,228,726 13,238,291

94,007,480 86,926,227 13,228,726 13,238,291

Current 63,726 73,291 63,726 73,291

Non-current 93,943,754 86,852,936 13,165,000 13,165,000

Debt securities of N80,778,754,000 (USD 496,947,000) represents amortised cost of dollar guaranteed note issued by

GTB B.V., Netherlands. The balance reported in comparative period is net of N3,930,048,000 invested by members of the

Group in its Eurobond . The note of USD 500,000,000 (principal) was issued in May 2011 for a period of 5 years at 7.5%

per annum payable semi-annually.

The amount of N13,228,756,000 represents fixed rate senior unsecured non-convertible bonds issued by the Bank in

December 2009. The debt security is redeemable in December 2014 and coupon is payable half yearly at 13.5% per annum.

The amount represents the first tranche of a N200 billion debt issuance programme.

232



38 Other liabilities


In thousands of Nigerian Naira Note Jun-2013 Dec-2012 Jun-2013 Dec-2012

Cash settled share based payment liability 7,126,099 7,340,059 - -

Liability for defined contribution obligations Note 38(a) 110,738 7,314 103,053 -

Deferred income on financial guarantee contracts 334,198 304,746 193,664 214,752

Certified cheques 9,313,362 8,882,330 8,066,220 8,464,554

Lease obligation (b) 3,098,226 3,242,131 3,098,226 3,242,131

Customers' deposit for foreign trade (c) 43,992,887 46,133,172 43,992,887 46,133,211

Other current liabilities 24,560,085 15,041,995 21,589,292 11,803,521

Deposit for shares 926,566 20,349 11,160 14,287

Liabilities to customers under investment contracts - - - -

89,462,161 80,972,096 77,054,502 69,872,456

Current 79,101,412 44,972,496 73,826,354 41,367,519

Non-current 10,360,749 35,999,600 3,228,148 28,504,937

(a) The Bank and its employees each contributes a minimum of 7.5% of basic salary, housing and transport allowance to each

employee's retirement savings account maintained with their nominal pension fund administrators. The amount not yet

transferred as at period end of N103,053,000 (December 2012: nil) was settled subsequent to that date.

(b) The lease obligation relates to other transportation equipment held under a finance lease arrangement. The net carrying

amount of the assets, included within property, plant and equipment is N2,237,054,000 (December 2012: N2,481,096,000)

The lease agreement includes fixed lease payments and a purchase option at the end of the 10 year lease term. The

agreement is non-cancellable but does not contain any further restrictions. No contingent rents were recognised as

an expense in the period (June 2012:Nil)

The future minimum lease payments extend over a number of years. This is analysed as follows:



Not more than one year 780,154 624,681 780,154 624,681

Over one year but less than five years 2,860,565 2,998,470 2,860,565 2,998,470

Over five years - 249,873 - 249,873

Less future finance charges (542,493) (630,893) (542,493) (630,893)

3,098,226 3,242,131 3,098,226 3,242,131

(c) This represents the Naira value of foreign currencies held on behalf of customers in various foreign accounts

to cover letters of credit transactions. The corresponding balance is included in Balances held with other banks.

233



(d) Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

Average Average

Exercise Price Share Rights Exercise Price Share Rights

Per Share (thousands) Per Share (thousands)

At 1 January 17.13 428,420 11.67 427,280

Granted 8.24 3,300 8.58 48,392

Forfeited - - 8.51 (675)

Exercised 23.26 (20,664) 15.70 (46,578)

At at end of the period 17.86 411,056 17.13 428,420

Out of the 411,056,000 outstanding SARs (2012: 428,420,000 SARs ), 208,474,734 SARs (2012: 341,488,864) were exercisable.

SARs exercised in 2013 resulted in 20,664,000 shares (2012:46,578,000) being issued at a weighted average price of

N23.26 each (2012:N15.70 each). The related weighted average share price at the time of exercise was N23.26 (2012:N15.70)

per share.

2013 2012

234



39 Defined benefit obligations

The Bank operates a non-contributory, funded lump sum defined benefit gratuity scheme. Employees are entitled to join the

scheme after completing 10 full years of service. Employees’ terminal benefits are calculated based on number of years of

continuous service, limited to a maximum of 10 years.

The amounts recognised in the statement of financial position are as follows:



Present value of funded obligations (1,940,855) (1,940,855) (1,940,855) (1,940,855)

Total present value of defined benefit obligations (1,940,855) (1,940,855) (1,940,855) (1,940,855)

Fair value of plan assets 6,613,483 6,613,483 6,613,483 6,613,483

Present value of net asset/(obligations) 4,672,628 4,672,628 4,672,628 4,672,628

Unrecognized actuarial gains and losses - - - -

Recognized asset/(liability) for defined benefit obligations 4,672,628 4,672,628 4,672,628 4,672,628

The bank's surplus in defined benefit plan is the same as figure determined using asset ceiling.

The bank has a right to surplus on its plan assets. There are no unrecognised actuarial gains and losses.

Movement in the present value of defined benefit obligations:



(Deficit)/surplus on defined benefit

obligations, beginning of period 4,672,628 4,385,199 4,672,628 4,385,199

Interest costs - (92,819) - (92,819)

Current service costs - (137,915) - (137,915)

Expected return on plan assets - 827,223 - 827,223

Net actuarial gain/(loss) for the period - Obligations - (2,363,524) - (2,363,524)

Net actuarial gain/(loss) for the period - Plan Assets - 57,554 - 57,554

Contributions paid - 1,996,910 - 1,996,910

(Deficit)/surplus for defined benefit

obligations, end of period 4,672,628 4,672,628 4,672,628 4,672,628

235



Plan assets consist of the following:



Equity securities 1,874,101 1,874,101 1,874,101 1,874,101

Government securities 293,428 293,428 293,428 293,428

Offshore investments 1,269,899 1,269,899 1,269,899 1,269,899

Cash and bank balances 3,176,055 3,176,055 3,176,055 3,176,055

6,613,483 6,613,483 6,613,483 6,613,483

Group


Equity securities 1,874,101 27% 1,874,101 27%

Government bonds 293,428 4% 293,428 4%

Offshore investments 1,269,899 19% 1,269,899 19%

Cash and bank balances 3,176,055 48% 3,176,055 48%

6,613,483 100% 6,613,483 100%

Parent


Equity securities 1,874,101 27% 1,874,101 27%

Government bonds 293,428 4% 293,428 4%

Offshore investments 1,269,899 19% 1,269,899 19%

Cash and bank balances 3,176,055 48% 3,176,055 48%

6,613,483 100% 6,613,483 100%

The defined benefit plan assets are under the management of custodians - Crusader Sterling Pension Limited and

First Pension Custodian Nigeria Limited.

Plan assets include the Group’s ordinary shares with a fair value of N1,758,172,00 (2012: N1,758,172,000).

Expected contributions to post-employment benefit plans for the year ending 31 December 2014 are N1,200,000,000

Plan assets are valued at current market value. The expected return on plan assets is determined by considering the

expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest

investments are based on gross redemption yields as at the date of the consolidated statement of financial position.

Expected returns on equity reflect long-term real rates of return experienced in the respective markets.

Jun-2013 Dec-2012

Jun-2013 Dec-2012

236



Movement in plan assets:



Fair value of plan assets, beginning of the period 6,613,483 6,088,763 6,613,483 6,088,763

Contributions paid into/(withdrawn from) the plan - 1,996,910 - 1,996,910

Benefits paid by the plan - (2,356,967) - (2,356,967)

Actuarial gain/(loss) - 57,554 - 57,554

Expected return on plan assets - 827,223 - 827,223

Fair value of plan assets, end of the period 6,613,483 6,613,483 6,613,483 6,613,483

Movement in present value of obligations:



Present value of obligation, beginning of the period 1,940,855 1,703,564 1,940,855 1,703,564

Interest cost - 92,819 - 92,819

Current service cost - 137,915 - 137,915

Benefits paid - (2,356,967) - (2,356,967)

Actuarial (gain)/loss on obligation - 2,363,524 - 2,363,524

Present value of obligation at end of the period 1,940,855 1,940,855 1,940,855 1,940,855

237



Actuarial assumptionsPrincipal actuarial assumptions at the reporting date (expressed as weighted averages):

2013 2012

Expected return on plan assets at 1 January 14% 14%

Future salary increases 12% 12%

Retirement age for both male and female 60 years 60 years

Retirement Rate: 50 – 59 2% 2%

Withdrawal Rate: 18 – 29 5% 5%



Assumptions regarding future mortality before retirement are based on A49/52 ultimate table published by the

Institute of Actuaries of United Kingdom.

The overall expected long-term rate of return on assets is 14%. The expected long-term rate of return is based

on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based

entirely on current market yields on Nigerian Government Bonds. The component of the rate of remuneration

increase based on seniority and promotion is an average of 2% per annum. The inflation component has been

worked out at 10% per annum.

For members in active service as at the valuation date, the projected unit credit method of valuation as required

under the IFRS has been adopted.

Historical information

In thousands of Nigerian Naira Jun-2013 Dec-2012 Dec-2011 Dec-2010 Dec-2009

Present value of the defined benefit obligation (1,940,855) 422,669 (2,065,771) (2,400,746) (2,311,829)

Fair value of plan assets 6,613,483 6,555,929 6,403,690 4,329,807 3,183,481

Experience adjustments on plan liabilities - (2,363,524) 362,207 574,498 359,019

Experience adjustments on plan assets - 57,554 (314,927) 264,227 108,493

Surplus/(deficit) 4,672,628 4,672,628 4,385,199 2,767,786 1,339,164

238



40 Other borrowed fundsGroup Group Parent Parent


Due to IFC (see note (i) below) 30,066,653 29,633,112 30,066,653 29,633,112

Due to ADB (see note (ii) below) 14,638,536 14,640,013 14,638,536 14,640,013

Due to FMO (see note (iii) below) 616,011 985,390 - -

Due to BOI (see note (iv) below) 33,416,905 35,654,048 33,416,905 35,654,048

Due to GTBV (see note (v) below) - - 80,778,754 77,617,984

Due to CAC (see note (vi) below) 5,500,000 5,500,000 5,500,000 5,500,000

Due to Proparco (see note (vii) below) 5,478,602 6,149,261 5,478,602 6,149,261

Due to EDIF (see note (viii) below) 474,823 - - -

90,191,530 92,561,824 169,879,450 169,194,418

Current 13,272,778 11,835,103 12,401,943 10,849,713

Non-current 76,918,752 80,726,721 157,477,507 158,344,705

i). The amount of N30,066,653,000 (USD 184,969,000) (December 2012: N29,633,112,000 ; USD 189,728,000) represents the

balances on various facilities granted by the International Finance Corporation (IFC) between January 2007 and December 2011,

repayable over 7 to 9 years at interest rates varying from 2.75% to 3.5% above LIBOR rates.

ii). The amount of N14,638,536,000 (USD90,056,000) (December 2012: N14,640,013,000; USD93,734,000) represents the

outstanding balance on a dollar facility of $130,000,000 by the Bank of Industry granted by the African Development

Bank (ADB) between September 2007 and December 2011 repayable over 7 years. Interest is payable half yearly at a rate per

annum determined by the Bank to range between the sum of LIBOR or its successor rate for such interest periods plus 245

basis points per annum and 5.157%.

iii). The amount of N616,011,000 (USD3,790,000) (December 2012: N985,390,000; USD6,309,000) represents the outstanding

balance on the term loan facility of USD15,000,000 granted by FMO (an entrepreneurial development bank of the

Netherlands) in December 2009 for a period of 4 years. The principal is repayable at maturity in January 2014 while

the interest is repayable quarterly over the tenure of the facility at 4.5% above LIBOR rates.

iv). The amount of N33,416,905,000 (December 2012: N35,654,048,000) represents the outstanding balance on a naira facility

granted (BOI) in August 2010 for a period of 15 years. The facility (an on-lending loan) is an initiative of the Central Bank

of Nigeria to unlock the credit market in the country through the revamping of power projects and the refinancing and

restructuring of bank loans. The principal amount is repayable in quarterly instalments as specified against each beneficiary

customer in the schedule attached to the offer letter. There is no interest repayable on the facility.

v). The amount of N80,778,754,000 (USD 496,947,000) represents amortised cost of dollar guaranteed notes issued by GTB Finance B

Netherlands. It represents the 2nd tranche of $500,000,000 issued in May 2011 for a period of 5 years with the principal

amount repayable at the end of the tenor while interest on the notes is payable semi-annually at 7.5% per annum.

vi). The amount of N5,500,000,000 (December 2012: N5,500,000,000) represents the outstanding balance on a facility

granted by the Debt Management Office in tranches between April and August 2010 for 7 years. It is an initiative of

Central Bank of Nigeria and Federal Ministry of Agriculture and Water resources aimed at the growth and development

of commercial agriculture enterprise in Nigeria. The funds are made available to participating banks at zero cost,

for on lending to commercial agriculture enterprise at a maximum rate of 9.00% p.a.

239



vii). The amount of N5,478,602,000 (USD 33,704,000 ) represents the outstanding balance on a dollar term loan facility

granted by Proparco in December 2011 for a period of 5 years. Interest is payable half yearly at 4.46% over the

tenure of the facility.

viii). The amount of N474,823,000 (USD 2,921,000) represents borrowing from Export Development and Investment Fund .

41 Capital and reservesShare capital

benefits at meetings of the Group



(a) Authorised -

50,000,000,000 ordinary shares of 50k each

(31 December 2012: 50,000,000,000 of 50k each) 25,000,000 25,000,000 25,000,000 25,000,000



(b) Issued and fully paid:

29,431,179,224 ordinary shares of 50 kobo

each (31 December 2012: 29,431,179,224

ordinary shares of 50k each) 14,715,590 14,715,590 14,715,590 14,715,590



25,897,729,937 ordinary shares of 50k each

(31 December 2012: 25,925,597,487) 12,948,865 12,962,799 12,948,865 12,962,799

3,533,449,287 ordinary shares (GDR) of 50k

each (31 December 2012: 3,505,581,737) 1,766,725 1,752,791 1,766,725 1,752,791

14,715,590 14,715,590 14,715,590 14,715,590

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled

to vote at meetings of the Group. All ordinary shares and GDR shares rank pari-passu with the same rights and

240



The movement on the issued and fully paid-up share capital account during the year was as follows:



Balance, beginning of period 14,715,590 14,715,590 14,715,590 14,715,590

Increase in the period - - - -

Bonus shares capitalized - - - -

Balance, end of period 14,715,590 14,715,590 14,715,590 14,715,590

Share capital

Number of

shares

(thousands) Ordinary shares

Share

premium

Treasury

shares

At January 2012 29,431,180 14,715,590 123,471,114 (2,046,714)

Proceeds from shares issued - - - -

Bonus capitalised - - - -

(Purchases)/sales of treasury shares - - - -

At 31 December 2012/1 January 2013 29,431,180 14,715,590 123,471,114 (2,046,714)

Bonus capitalised - - - -

Proceeds from shares issued - - - -

(Purchases)/sales of treasury shares - - - -

At 30 June 2013 29,431,180 14,715,590 123,471,114 (2,046,714)

June

Share premium

Share premium is the excess paid by shareholders over the nominal value for their shares.

Other regulatory reserves

The other regulatory reserve includes movements in the statutory reserves and the small and medium enterprises equity

investment reserve.

(i) Statutory Reserves: Nigerian banking regulations require the Bank to make an annual appropriation to a statutory reserve.

As stipulated by S.16(1) of the Banks and Other Financial Institution Act of 1991 (amended), an appropriation of 30% of

profit after tax is made if the statutory reserve is less than paid-up share capital and 15% of profit after tax if the statutory

reserve is greater than the paid up share capital. The bank appropriated N14,133,670,000 representing 30% of its Profit after tax

to statutory reserve.

(ii) Small and medium enterprises equity investment reserve (SMEEIS): The SMEEIS reserve is maintained to comply with the Centra

of Nigeria (CBN) requirement that all licensed banks set aside a portion of the profit after tax in a fund to be used

to finance equity investment in qualifying small and medium scale enterprises. Under the terms of the guideline

(amended by CBN letter dated 11 July 2006), the contributions will be 10% of profit after tax and shall continue after

the first 5 years but banks’ contributions shall thereafter reduce to 5% of profit after tax. However, this is no longer

241



mandatory. The small and medium scale industries equity investment scheme reserves are non-distributable.

The bank did not make any appropriation to this reserve during the period.

(iii) Treasury shares

Treasury shares represent the Bank’s shares of 1,170,674,231 (31 December 2012 : 1,170,674,231) held by the Staff

Investment Trust as at 31 December 2012.

(iv) Bonus reserves

Subsequent to the balance sheet date, the Board of Directors has approved the transfer of Nil (2012: Nil)

bonus shares.

(v) Fair value reserve

The fair value reserve includes the net cumulative change in the fair value of available-for-sale investments until the

investment is derecognised or impaired.

(vi) Regulatory risk reserve

The regulatory risk reserves warehouses the difference between the impairment balance on loans and advances as determined

in accordance with the provisions of Prudential guidelines of Central Bank of Nigeria as opposed to the requirement of IAS 39

Incurred loss model. The key component of CBN Prudential Guidelines is the inclusion of 1% General Loan Loss provisioning of

performing loans in the entity impairment figures, this 1% provision amounting to N8.43 billion is not required by IAS 39.

The total Parent's balance in regulatory risk reserve is N12.46 billion.

(vii) Retained earnings

Retained earnings are the carried forward recognised income net of expenses plus current period profit attributable to

shareholders.

(viii) Non-controlling interest

The entities accounting for the non-controlling interest balance is shown below:



GTB (Gambia) Limited 365,285 375,242 - -

GTB (Sierra Leone) Limited 351,231 282,664 - -

GTB (Ghana) Limited 516,665 598,480 - -

GTB Liberia 13,121 12,305 - -

1,246,302 1,268,691 - -

42 Dividends The following dividends were declared and paid by the Group during the period ended:



Balance, beginning of period - - - -

Final dividend declared 38,260,532 25,016,504 38,260,532 25,016,504

Interim dividend declared - 7,357,794 - 7,357,794

Payment during the period (38,260,532) (32,374,298) (38,260,532) (32,374,298)

Balance, end of period - - - -

242


243

43. The Board of Directors, subsequent to the balance sheet date, proposed a dividend of N0.25(30 June 2012: N0.25) per share on the issued share capital of 29,431,179,224 ordinary shares of 50k each. The dividend proposed is subject to the approval of shareholders at the next annual general meeting.

44. Leasing

As lessor The Group acts as lessor under finance leases, providing financing for its customers and leasing assets for their own use. In addition, assets leased by the Group may be sublet to other parties. The income from the lease is recognized as interest income on the Group’s income statement, representing the Group’s return on investment in the capital lease while a receivable is recognized for the Lease amount outstanding at the reporting period. As lessee The Group leases offices, branches and other premises under operating lease arrangements. The leases have various terms and renewal rights. The lease rentals are paid in advance and recognized on straight line basis over the lease period. The outstanding balance is accounted for as prepaid lease rentals. There are no contingent rents payable. For finance lease agreements in which the group is lessee, details of the resulting commitments have been included in other liabilities.

45. Contingencies

Claims and litigation

The Bank, in its ordinary course of business, is presently involved in 332 cases as a defendant (31 December 2012: 310) and 148 cases as a plaintiff (31 December 2012: 133). The total amount claimed in the 332 cases against the Bank is estimated at N385,181,035,876 and $133,035,449 (31 December 2012: N304,620,174,907 and $133,520,449) while the total amount claimed in the 148 cases instituted by the Bank is N51,971,123,171 (31 December 2012: N50,236,783,927). However, the solicitors of the Bank are of the view that the probable liability arising from the cases pending against the Bank is not likely to exceed N53,353,625 (31 December 2012: N27,310,000 and US$146,346). The amounts have been fully provided for in the financial statements.

Based on the advice of the solicitors, the Directors of the Bank are of the opinion that none of the aforementioned cases is likely to have a material adverse effect on the Bank and they are not aware of any other pending and or threatened claims or litigation which may be material to the financial statements.



Contingent liabilities and commitments

In common with other banks, the Group conducts business involving acceptances, performance bonds and indemnities.

The majority of these facilities are offset by corresponding obligations of third parties. Contingent liabilities and

commitments comprise acceptances, endorsements, guarantees and letters of credit.

Nature of instruments

An acceptance is an undertaking by a bank to pay a bill of exchange drawn on a customer. The Group expects most

acceptances to be presented, but reimbursement by the customer is normally immediate. Endorsements are residual

liabilities of the Group in respect of bills of exchange, which have been paid and subsequently rediscounted.

Guarantees and letters of credit are given as security to support the performance of a customer to third parties.

As the Group will only be required to meet these obligations in the event of the customer’s default, the cash

requirements of these instruments are expected to be considerably below their nominal amounts.

Other contingent liabilities include transaction related customs and performances bond and are, generally,

commitments to third parties which are not directly dependent on the customer’s creditworthiness.

Documentary credits commit the Group to make payments to third parties, are on production of documents, which

usually reimbursed immediately by customers. The following tables summarise the nominal principal amount of

contingent liabilities and commitments with off-financial position risk.

Acceptances, bonds, guarantees and other obligations for the account of customers:

a. These comprise:



Contingent liabilities:

Acceptances and guaranteed commercial papers - 83,847 - -

Transaction related bonds and guarantees 393,884,665 363,927,051 385,272,985 355,132,185

Guaranteed facilities 95,314,857 64,123,627 95,314,857 64,055,852

489,199,522 428,134,525 480,587,842 419,188,037

Commitments:

Short term foreign currency related transactions 60,246,815 21,056,857 60,246,815 21,056,857

Clean line facilities and letters of credit 91,347,731 77,094,340 66,948,768 54,726,233

Other commitments 961,577 1,167,439 - -

152,556,123 99,318,636 127,195,583 75,783,090

b. 71% of all the transaction related bonds and guarantees are collaterised (December 2012: 65%). The cash

component of the balance was N53,490,666,000 (31 December 2012: N61,398,412,00).

c. The Bank granted clean line facilities for letters of credit during the period to guarantee the performance of

customers to third parties.

244


245

46. Group entities The Group is controlled by Guaranty Trust Bank Plc “the ultimate Parent” (incorporated in Nigeria). The controlling interest of Guaranty Trust Bank Plc in the Group entities is disclosed in the table below:

i. Significant subsidiaries Ownership Ownership Country of interest interest incorporation June 2013 December 2012 1 Guaranty Trust Bank Gambia Limited Gambia 77.81% 77.81% 2 Guaranty Trust Bank Sierra Leone Ltd Sierra Leone 84.24% 84.24% 3 Guaranty Trust Bank Ghana Limited Ghana 95.33% 95.33% 4 Guaranty Trust Bank UK Limited United Kingdom 100.00% 100.00% 5 Guaranty Trust Bank Liberia Limited Liberia 99.43% 99.43% 7 Guaranty Trust Bank Cote D’Ivoire Limited Cote D’Ivoire 98.98% 98.98% Special purpose entities: Staff Investment Trust Nigeria 100.00% 100.00% Guaranty Trust Bank Finance BV Netherlands 100.00% 100.00%

The remaining interests in the Group are held by minority shareholders. (a) GTB Gambia was incorporated in September 2001 and commenced operations in January 2002. (b) GTB Sierra Leone was incorporated in September 2001 and commenced operations in January 2002. (c) Guaranty Trust Bank Ghana was incorporated in October 2004 and commenced operations in March

2006.

(d) Guaranty Trust Bank (UK) Limited was incorporated in February 2007 and commenced operations in January 2008. During the year, the Bank invested the sum of N2,822,427,000 in Guaranty Trust Bank UK Limited.

(e) Guaranty Trust Bank (Liberia) Limited was incorporated in September 2008 and commenced

operations in March 2009.

(f) Guaranty Trust Bank Cote D’Ivoire is Guaranty Trust Bank Plc’s first subsidiary in Francophone West Africa. The Bank has been licensed by the Central Bank of Cote D’Ivoire to offer banking services to the Ivorian public and is situated at an ultra-modern office at 11, Rue du Senateur, LAGAROSSE, Abidjan-Plateau. Banking operations commenced at the new subsidiary on April 16, 2012.


246

The Bank’s primary business involves the provision of a full range of financial services to corporate and individual clients. These include investment, advisory, retail, commercial, corporate and institutional banking services. The bank also offers medium to long-term financing, fund management services and various credit products to meet the needs of its preferred clientele.

(g) GTB Finance B.V was incorporated in December 2006 and commenced operations in December 2006. An obligation also exists between the Bank and GTB Finance B.V, for which GTB Finance B.V was expected to lend the Bank the sum of N307.87 million ($2,608,000) as a share premium loan. The loan agreement between both parties however permits that the obligation of GTB Finance B.V. to grant the loan be set-off against the obligation of the Bank to repay the loan such that each party's obligation either as a borrower or lender is discharged. In view of this, no loan payable has been recognised in the Bank's financial statements.

47. Related parties (a) Related party transactions

Parties are considered to be related if one party has the ability to control the other party or exercise influence over the other party in making financial and operational decisions, or one other party controls both. The definition includes subsidiaries, associates, joint ventures and the Group’s pension schemes, as well as key management personnel. (b) Subsidiaries

Transactions between Guaranty Trust Bank Plc and its subsidiaries also meet the definition of related party transactions. Where these are eliminated on consolidation, they are not disclosed in the consolidated financial statements. (c) Transactions with key management personnel

The Group’s key management personnel, and persons connected with them, are also considered to be related parties. The definition of key management includes the close members of family of key personnel and any entity over which key management exercise control. The key management personnel have been identified as the executive and non-executive directors of the Group. Close members of family are those family members who may be expected to influence, or be influenced by that individual in their dealings with Guaranty Trust Bank Plc and its subsidiaries.



(d) Risk assets outstanding 30 June 2013During the period the Bank granted various credit facilities to companies whose directors are also directors of Guaranty Trust Bank Plc at rates and terms

comparable to other facilities in the Bank's portfolio. An aggregate of N5,764,298,000 (31 December 2012:N6,336,282,000 ) was outstanding on these facilities

at the end of the period. The status of performance of each facility is as shown below:


Name of company /individual Relationship Facility type Status Nature of Security Parent Parent

Jun-2013 Dec-2012

Jaykay Pharmacy Ltd Director Related Term Loan/Overdaft Performing Asset Debenture/Real Estate 49,680 54,298

Comprehensive Project Mgt.Ser Director Related Advance Payment Guarantee Performing Cash - 8,000

Touchdown Travels Limited Director Related Performance Bond Performing Cash - 1,500

Kresta Laurel Ltd. Director Related Bond Line Performing Cash 76,312 77,782

Afren Resources Limited Director Related Custom Duty Bond Performing Cash / Corporate Guarantee 831,674 831,674

Mr. & Mrs. E. U. Imomoh Director Related Overdraft Performing Corporate Guarantee - 11,033

International Travel Express Ltd Director Related Overdraft Performing Domiciliation 166,333 187,411

Oduyemi Oluwole Sunday Director Related Overdraft Performing Domiciliation/ Cash - 1,536

Fola Adeola Director Related Overdraft Performing Equitable Mortgage - 108,284

Augusto Enterprises Director Related Term Loan Performing Equitable Mortgage 6,667 7,666

Enwereji Nneka Stella Director Related Gt Mortgage Performing Legal Mortgage 21,600 23,753

Olanrewaju Kalejaiye Insider Related Gt Mortgage / Max Advance Performing Legal Mortgage 57,186 63,260

Main One Cable Ltd. Director Related Term Loan Performing Mortage Debenture/Shares 3,658,188 4,001,037

Polystyrene Industries Ltd Director Related Term LoanPerforming

Mortgage Debenture

/Corporate Guarantee 21,667 26,795

Mediabloc Consulting Nigeria Ltd. Insider Related Term Loan / Overdaft Performing Personal Guarantee 20,598 18,934

Broadway Loteza Enterprises Insider Related Overdraft/Term Loan Performing Shares - 633

Adam And Eve Nigeria Ltd. Insider Related Overdraft Performing Tripartite Legal Mortgage 7,176 4,322

Payless Butchers And Supermart Director Related Term Loan / Overdaft Performing Tripartite Legal Mortgage 10,271 1,651

Emzor Pharmaceuticals Director Related Terrm Loan/Overdraft/Letter Performing Tripartite Legal Mortgage 615,873 906,713

IBFC Agusto Training Limited Director related Overdraft Performing All Asset Debenture 7,801 -

Ademola Kuye & Company Insider related Term Loan Performing Equitable Mortgage 50,000 -

Discovery House Mont.Sch. Ltd Insider related Term Loan Performing Tripartite Legal Mortgage 50,000 -

Cubic Contractors Limited Director related Advance Payment Guarantee Performing Mortgage Debenture, Personal G 113,272 -

5,764,298 6,336,282

247



(e) Director/insiders related deposit liabiilties


Name of company/Individual Relationship Type of Deposit Parent Parent

Jun-2013 Dec-2012

Agusto & Co. Limited Director related Demand and Time Deposits 16,681 8,280

Alliance Consulting Director related Demand Deposits 675 2,023

Comprehensive Project Mgt.

Services Director related Demand Deposits 15,870 29,139

Cubic Contractors Limited Director related Demand Deposits 7,243 25,978

Eterna Plc Director related Demand and Time Deposits 754 7,088

F & C Securities Limited Director related Demand and Time Deposits 3,456 955

IBFC Agusto Training Director related Demand Deposits 137 1,753

IBFC Limited Director related Demand and Time Deposits 6 55

Jaykay Pharmacy Limited Director related Demand and Time Deposits 18 48

Kresta Laurel Limited Director related Demand and Time Deposits 3,976 9,256

Main One Cable Company Ltd Director related Demand Deposits 108,922 145,773

Mayfield Finance Company Director related Demand Deposits 11 558

Mayfield Ventures Limited Director related Demand Deposits 11 11

Payless Butchers & Supermart Ltd Director related Demand Deposits 109 1,496

Sikilu Petroleum & Gas Co Ltd Director related Demand Deposits 3 3

WSTC Financial Services Ltd Director related Demand and Time Deposits 275,734 308,397

WSTC Nominee Limited Director related Demand Deposits 431 431

Zito Phranzlo Int'L Limited Director related Demand Deposits 53 382

International Travel Express Ltd Director related Demand Deposits 8 9

Afren Onshore Ltd Director related Demand Deposits 1 1

Afren Resources Limited Director related Demand and Time Deposits 12,002 11,784

Adam And Eve Nigeria Limited Insider Related Demand Deposits 68 -

Augusto Enterprises Nig. Ltd Director related Demand Deposits 249 -

Enwereji Nneka Stella Director related Demand Deposits 313 -

Jegede Fehintola O. Insider Related Demand Deposits 52 -

Olanrewaju Kalejaiye Insider Related Demand Deposits 829 -

Mediabloc Consulting Nigeria Ltd. Insider Related Demand Deposits 2 -

447,614 553,420

248



(f) Subsidiaries' deposit account balances


Name of company/Individual Relationship Type of Deposit Jun-2013 Dec-2012

N N

GTB Sierra Leone Subsidiaries Domicilliary 601,604 578,056

GTB Ghana Subsidiaries Demand Deposit 3,909,859 3,072,683

GTB Ghana Subsidiaries Domicilliary 282,639 31,431

4,794,102 3,682,170

249



-

(g) Key management personnel and their immediate relatives engaged in the following transactions with the

Group during the period:

Loans and advances:



Secured loans 5,764,298 6,336,282 5,764,298 6,336,282

Deposits:



Total deposits 447,614 553,420 447,614 553,420

Interest rates charged on balances outstanding are at rates that would be charged in the normal course of business.

The secured loans granted are secured over real estate, equity and other assets of the respective borrowers. No

impairment losses have been recorded against balances outstanding during the period with key management

personnel, and no specific allowance has been made for impairment losses on balances with key management

personnel and their immediate relatives at the period end.

(h) Key management personnel compensation for the period comprises:



Wages and salaries 1,004,170 998,375 863,055 928,027

Post-employment benefits 11,056 60,291 11,056 60,291

Share-based payments 380,980 431,000 - -

Increase /(decrease) in share

appreciation rights 10,646 567,687 - -

1,406,852 2,057,353 874,111 988,317

(h) (i) Directors’ remuneration

Directors' remuneration excluding pension contributions and certain benefits was provided as follows:



Fees as directors 86,692 69,468 43,000 42,500

Other allowances 97,240 129,061 80,589 93,437

183,932 198,529 123,589 135,937

Executive compensation 298,988 273,700 292,467 266,595

482,920 472,229 416,056 402,532

250



(ii) The directors' remuneration shown above includes:

Parent Parent

In thousands of Nigerian Naira Jun-2013 Jun-2012

Chairman 13,741 8,062

Highest paid director 72,704 67,010

(iii) The emoluments of all other directors fell within the following ranges:

Parent Parent

Jun-2013 Jun-2012

N 6,500,001 - N11,000,000 2 2

N11,000,001 - N11,500,000 - -

N11,500,001 - N12,000,000 - -

N12,000,001 - N12,500,000 1 -

N12,500,001 - N13,000,000 - -

N13,000,001 - N13,500,000 - -

N13,500,001 - N22,500,000 5 6

Above N22,500,001 6 6

14 14

48 Contraventions

The bank did not contravene any banking legislation during the reporting period.

49 Subsequent eventsThere were no events subsequent to the financial position date which require adjustment to, or disclosure in, these

financial statements

251

Regulatory requirements under the IFRS Regime Guaranty Trust Bank and Subsidiary Companies

252

Regulatory Requirements under the IFRS Regime In addressing the challenges faced by the Nigerian Banking industry which was at the brink of a crisis as a result of spiral effects of the global financial meltdown, the CBN undertook a review of the prudential guidelines. In the revised guidelines, which became effective 1st of July, 2010, the CBN required that Banks should have their credit rating updated on a regular basis. Furthermore, the CBN required that banks should disclose this credit rating prominently in their published annual reports. In their report dated 26 July, 2013, Fitch rated the Bank a long term International Issuer and Credit Rating of B+ and a National Long term credit rating of AA-. The Rating agency stated that the ratings were based on the Bank’s strong franchise, its solid financial metrics compared to peers and the challenging operating environment of Nigeria in which the Bank operates. Furthermore, CBN provided for the adaptation of the prudential guidelines to IFRS after it has been adopted in Nigeria. Paragraph 12.4 of the revised Prudential Guidelines for Deposit Money Banks in Nigeria stipulates that Banks would be required to make provisions for loans as prescribed in the relevant IFRS Standards when IFRS is adopted. However, Banks would be required to comply with the following: (a) Provisions for loans recognized in the profit and loss account should be determined based on the

requirements of IFRS. However, the IFRS provisions should be compared with provisions determined under prudential guidelines and the expected impact/changes in general reserve should be treated as follows:

i. Prudential Provisions is greater than IFRS provisions; transfer the difference from the

general reserve to a non-distributable regulatory reserve.

ii. Prudential Provisions is less than IFRS provisions; the excess charges resulting should be transferred from the regulatory reserve account to the general reserve to the extent of the non-distributable reserve previously recognized.

(b) The non distributable reserve should be classified under Tier 1 as part of core capital.

The group has fully complied with the requirements of the guidelines.

Provisioning as recommended by Prudential Guideline Loan provisioning is segregated along two (2) categories as detailed below:

1. Loans other than Specialized Loans

The provisioning policy for ‘loans other than specialized loans’ covers the following:

i. Commercial Loans ii. Commodities Financing


253

iii. Corporate Loans iv. Retail & Consumer Credits v. Neither past due nor impaired

vi. Facilities granted to federal, state and local governments and their parastatals. vii. Facilities not specifically classified as specialized loans by the CBN.

The bank’s provisioning benchmark for ‘loans other than specialized loans’ is highlighted in the table below: No of Days Overdrawn Classification % Provision taken

90 – 180 Substandard 10 180 – 360 Doubtful 50 Over 360 Lost 100

As soon as an account is classified as non-performing, the interest is accounted for on non-accrual basis i.e. interest is not recognized as income but suspended. Furthermore, if the occurrence of a loss event is certain, appropriate provisions will be made regardless of the fact that such loans does not fall in any of the above categories.

2. Specialized Loans The provisioning policy for specialized loans covers the following:

i. Agriculture Finance ii. Margin Loans

iii. Project Finance iv. Object Finance v. Real Estate Loans (Commercial and Residential)

vi. SME Loans

The bank’s provisioning benchmarks are spelt out below under each of the specialized loan types:


254

i. Agriculture Finance

a. Agriculture Finance - short term facilities (purchase of seeds, fertilizers, WC, and

other Inputs)

b. Agriculture Finance – long term facilities (Farm development finance, purchase of machinery, livestock financing )

Category Classification Days past due % provision

1 Watchlist Markup / interest or principal past due by 90days

0% of total outstanding balance

1A Substandard Markup / interest or principal past due by 90days to 1year


2 Doubtful Markup / interest or principal past due by 1 to 1.5 years


3 Very Doubtful

Markup / interest or principal past due by 1.5 to 2 years


4 Lost Markup / interest or principal past due by more than 2 years







2 Doubtful Markup / interest or principal past due by 1 to 2years


3 Very Doubtful

Markup / interest or principal past due by 2 to 3 years





255

ii. Mortgage Loans

iii.

gin Loans The shares backing margin facilities shall be marked to market on a daily basis in order to determine the potential loss in the portfolio. Provisions shall be made periodically for the excess of loan balance over the market value of the underlining shares. Any increase in the mark to market value from the previous valuation shall be recognized to the extent of the previous charge-off made.

iv. Project Finance

Category Classification Days past due Treatment of Income % provision

1 Watchlist

Markup / interest or principal past due by 90days

Suspend interest and realize on cash basis


1A Substandard

Markup / interest or principal past due by 90days to 1year

As above 10% of total outstanding balance

2 Doubtful

Markup / interest or principal past due by 1 to 1.5 years

As above

Unprovided balance should not exceed 50% of the estimated net realisable value of the security.

3 Very Doubtful



4 Lost

Markup / interest or principal past due by more than 2 years



1 Watchlist

Repayment on obligation btw 60% and 75% of amount due or installment 180days past due




256

v.

bject Finance

1A Substandard

Repayment below 60% of amount due or installment btw 180 to 1year past due


2 Doubtful

Repayment below 60% of amount or installment overdue by 1 to 2 years


3 Very Doubtful

Repayment below 60% of amount due or installment over due by 2 to 3 years


4 Lost

Repayment below 60% of amount due or installment overdue by more than 3 years



1 Watchlist

Repayment on obligation btw 60% and 75% of amount due or installment 180days past due



1A Substandard

Repayment below 60% of amount due or installment btw 180 to 1year past due


2 Doubtful

Repayment below 60% of amount or installment overdue by 1 to 2 years


3 Very Doubtful

Repayment below 60% of amount due or installment over due by 2 to 3 years


4 Lost

Repayment below 60% of amount due or installment overdue by more than 3 years



257

vi. SME a. SME Loans - SME short term facilities (Maturities of 1 year)

b. SME Loans - SME Long term facilities (Maturities of more than 1 year)




1A Substandard

Markup / interest or principal past due by 90days to 1year


2 Doubtful

Markup / interest or principal past due by 1 to 1.5 years


3 Very Doubtful



4 Lost

Markup / interest or principal past due by more than 2 years







2 Doubt Markup / interest or principal past due by 1 to 2years


3 Very Doubtful

Markup / interest or principal past due by 2 to 3 years




Regulatory requirements under IFRS regime Guaranty Trust Bank Plc and Subsidiary Companies

Value Added Statement For the period ended 30 June 2013

Group

Continuing Discontinued Continuing Discontinued

operations operations Total operations operations Total

N'000 N'000 N'000 % N'000 N'000 N'000 %

Gross earnings 124,202,363 - 124,202,363 113,526,502 1,064,166 114,590,668

Interest expense:

-Local (17,668,775) - (17,668,775) (13,014,157) (538,059) (13,552,216)

- Foreign (5,791,836) - (5,791,836) (5,771,293) - (5,771,293)

Premium ceded - - - - (1,943,737) (1,943,737)

100,741,752 - 100,741,752 94,741,052 (1,417,630) 93,323,422

Loan impairment charges / Net

impairment loss on financial assets (1,317,532) - (1,317,532) (2,410,863) (150,072) (2,560,935)

99,424,220 - 99,424,220 92,330,189 (1,567,702) 90,762,487

Bought in materials and services

- Local (25,908,990) - (25,908,990) (23,779,298) 3,405,655 (20,373,643)

- Foreign (271,927) - (271,927) (326,780) - (326,780)

Value added 73,243,303 - 73,243,303 100 68,224,111 1,837,953 70,062,064 100

Distribution

Employees

- Wages, salaries, pensions, gratuity and other employee benefits 10,976,285 - 10,976,285 15 10,400,084 613,007 11,013,091 16

Government

- Taxation 8,349,626 - 8,349,626 11 8,693,445 426,021 9,119,466 13

Retained in the Group

- For replacement of Property and equipment / intangible assets

(depreciation and amortisation) 4,902,531 - 4,902,531 7 4,187,943 189,848 4,377,791 6

- Profit for the year (including non - controlling interest, statutory

and regulatory risk reserves) 49,014,861 - 49,014,861 67 44,942,639 609,077 45,551,716 65

73,243,303 - 73,243,303 100 68,224,111 1,837,953 70,062,064 100

Jun-2013 Jun-2012

258


Value Added Statement For the period ended 30 June 2013

Parent

Continuing Discontinued Continuing Discontinued

operations operations Total operations operations Total

N'000 N'000 N'000 % N'000 N'000 N'000 %

Gross earnings 115,161,105 - 115,161,105 106,122,423 - 106,122,423

Interest expense:

-Local (17,657,736) - (17,657,736) (13,028,253) - (13,028,253)

- Foreign (4,141,767) - (4,141,767) (4,649,228) - (4,649,228)

93,361,602 - 93,361,602 88,444,942 - 88,444,942

Loan impairment charges / Net

impairment loss on financial assets (1,107,877) - (1,107,877) (1,707,356) - (1,707,356)

92,253,725 - 92,253,725 86,737,586 - 86,737,586

Bought in materials and services

- Local (23,378,919) - (23,378,919) (21,582,032) - (21,582,032)

- Foreign (271,927) - (271,927) (326,780) - (326,780)

Value added 68,602,879 - 68,602,879 100 64,828,774 - 64,828,774 100

Distribution

Employees

- Wages, salaries, pensions, gratuity and other employee benefits 9,705,384 - 9,705,384 14 8,213,674 - 8,213,674 13

Government

- Taxation 7,326,577 - 7,326,577 11 8,141,325 - 8,141,325 13

Retained in the Bank

- For replacement of Property and equipment / intangible assets

(depreciation and amortisation) 4,458,684 - 4,458,684 6 3,767,274 - 3,767,274 6

- To pay proposed dividend - - - - - - - -

- Profit for the year (including statutory and regulatory risk reserves) 47,112,234 - 47,112,234 69 44,706,501 - 44,706,501 68

68,602,879 - 68,602,879 100 64,828,774 - 64,828,774 100

Jun-2013 Jun-2012

259


Five Year Financial SummaryGroup


Assets

Cash and cash equivalents 232,414,899 322,989,480 368,282,477 273,074,591 255,944,975

Loans and advances to banks 4,143,418 4,864,824 158,616 186,480 146,002

Loans and advances to customers 894,862,976 779,050,018 706,893,133 603,906,669 574,586,579

Financial assets held for trading 31,066,348 271,073,896 173,297,556 148,872,254 134,926,969

Hedging derivatives - - - - -


– Available for sale 296,801,242 15,765,789 3,744,970 10,629,568 12,026,708

– Held to maturity 120,598,110 129,490,810 161,196,356 22,896,774 7,132,700

Assets pledged as collateral 27,529,108 31,203,230 45,588,084 29,481,804 22,112,657

Investment properties - - - 7,349,815 5,070,666

Property and equipment 63,737,475 60,886,728 57,510,622 47,092,669 41,281,423

Intangible assets 2,403,549 1,772,176 1,006,470 1,956,459 2,337,921

Deferred tax assets 863,887 991,791 96,820 587,881 410,864

Other assets 186,073,392 116,789,118 81,098,341 22,017,933 22,200,121

1,860,494,404 1,734,877,860 1,598,873,445 1,168,052,897 1,078,177,585

Assets classified as held for sale and discontinued operations - - 9,779,201 - -

Total assets 1,860,494,404 1,734,877,860 1,608,652,646 1,168,052,897 1,078,177,585

Liabilities

Deposits from banks 17,657,973 23,860,259 37,229,029 26,026,980 31,187,065

Deposits from customers 1,254,445,308 1,148,197,165 1,026,119,419 753,088,230 666,921,855

Other liabilities 89,462,161 80,972,096 52,323,162 65,037,039 90,521,190

Current income tax liabilities 11,963,123 15,630,973 14,062,596 9,529,921 3,483,561

Deferred tax liabilities 5,817,448 3,288,196 3,407,652 4,884,484 6,557,821

Liabilities on insurance contracts - - - 2,926,322 1,476,642

Debt securities issued 94,007,480 86,926,227 145,767,516 66,886,763 67,373,122

Other borrowed funds 90,191,530 92,561,824 93,230,139 23,033,947 12,390,288

1,563,545,023 1,451,436,740 1,372,139,513 951,413,686 879,911,544

Liabilities included in assets classified as held for sale and discontinued

operations - - 6,119,979 - -

Total liabilities 1,563,545,023 1,451,436,740 1,378,259,492 951,413,686 879,911,544

Equity

Capital and reserves attributable to equity holders of the parent entity

Share capital 14,715,590 14,715,590 14,715,590 11,658,594 9,326,875

Share premium 123,471,114 123,471,114 123,471,114 119,076,565 119,076,565

Treasury shares (2,046,714) (2,046,714) (2,046,714) (1,562,603) (1,873,920)

Retained earnings 34,403,282 41,380,776 25,130,520 13,329,100 10,215,217

Other components of equity 125,159,807 104,651,663 67,121,427 68,106,870 56,379,365

Total equity attributable to owners of the Bank 295,703,079 282,172,429 228,391,937 210,608,526 193,124,102

Non-controlling interests in equity 1,246,302 1,268,691 2,001,217 6,030,685 5,141,939

Total equity 296,949,381 283,441,120 230,393,154 216,639,211 198,266,041

Total equity and liabilities 1,860,494,404 1,734,877,860 1,608,652,646 1,168,052,897 1,078,177,585

260


Three Year Financial Summary Cont'dStatement of comprehensive income

Group In thousands of Nigerian Naira Jun-2013 Jun-2012 Jun-2011 Jun-2010 Jun-2009

Interest income 92,000,395 83,176,926 61,466,364 61,071,790 65,607,209

Interest expense (23,460,611) (18,785,450) (11,942,656) (19,637,037) (27,126,587)

Net interest income 68,539,784 64,391,476 49,523,708 41,434,753 38,480,622

Loan impairment charges (1,317,532) (2,410,863) (7,526,168) (2,892,173) (24,250,547)

Net interest income after loan impairment charges 67,222,252 61,980,613 41,997,540 38,542,580 14,230,075

Fee and commission income 25,048,165 24,809,180 22,078,092 17,939,270 17,596,682

Fee and commission expense (490,823) (783,073) (1,438,544) (1,472,424) (341,741)

Net fee and commission income 24,557,342 24,026,107 20,639,548 16,466,846 17,254,941

Net gains/(losses) on financial instruments classified as held for trading 3,517,125 2,981,141 1,965,034 1,308,881 4,068,820

Net income from derivative instruments held for risk management purposes - - - - -

Other income 3,636,678 2,559,255 4,753,613 2,642,698 3,322,788

Other income 7,153,803 5,540,396 6,718,647 3,951,579 7,391,608

Operating income 98,933,397 91,547,116 69,355,735 58,961,005 38,876,624

Net impairment loss on financial assets - - (1,181,354) - (3,241,884)

Net operating income after net impairment loss on financial assets 98,933,397 91,547,116 68,174,381 58,961,005 35,634,740

Personnel expenses (10,976,285) (10,400,084) (11,097,798) (9,301,615) (8,166,939)

General and administrative expenses (11,832,237) (11,097,511) (11,110,830) (12,816,236) (7,773,453)

Operating lease expenses (410,118) (638,698) (373,072) (288,587) (248,765)

Depreciation and amortization (4,902,531) (4,187,943) (3,586,036) (3,307,360) (2,852,856)

Other operating expenses (13,447,739) (11,586,796) (9,092,123) (7,361,260) (8,267,004)

Operating expenses (41,568,910) (37,911,032) (35,259,859) (33,075,058) (27,309,017)

Profit before income tax 57,364,487 53,636,084 32,914,522 25,885,947 8,325,723

Income tax expense (8,349,626) (8,693,445) (6,075,516) (7,497,416) 432,607

Profit for the period from continuing operations 49,014,861 44,942,639 26,839,006 18,388,531 8,758,330

Profit for the period from discontinued operations - 609,077 811,186 - -

Profit for the period 49,014,861 45,551,716 27,650,192 18,388,531 8,758,330




– Basic 1.73 1.59 0.95 0.77 0.48

– Diluted 1.73 1.59 0.95 0.77 0.48




– Basic 0.00 0.02 0.02 - -

– Diluted 0.00 0.02 0.02 - -

261


Five Year Financial SummaryBank


Assets

Cash and cash equivalents 180,356,202 256,433,560 330,294,424 226,123,548 232,253,559

Loans and advances to banks 32,498 177,985 158,616 186,480 146,002

Loans and advances to customers 848,309,592 742,436,944 679,358,919 574,255,521 550,281,123

Financial assets held for trading 27,358,077 267,417,182 151,819,087 131,189,143 126,598,639

Investment securities: - - -

– Available for sale 288,873,847 10,138,761 3,744,970 6,919,692 9,865,756

– Held to maturity 101,692,526 118,897,917 163,914,120 23,443,181 8,212,983

Assets pledged as collateral 27,529,108 31,203,230 45,588,084 29,481,804 22,112,657

Investment in subsidiaries 22,998,802 22,925,088 16,233,581 30,115,862 29,774,817

Property and equipment 58,069,741 55,496,808 52,494,230 42,538,693 36,223,904

Intangible assets 2,052,665 1,539,717 762,709 1,374,207 1,835,440

Other assets 179,283,124 113,650,031 75,658,805 17,675,985 15,649,728

1,736,556,182 1,620,317,223 1,520,027,545 1,083,304,116 1,032,954,608

Assets classified as held for sale and discontinued operations - - 3,500,000 - -

Total assets 1,736,556,182 1,620,317,223 1,523,527,545 1,083,304,116 1,032,954,608

Liabilities

Deposits from banks 1,430,966 7,170,321 21,636,242 5,361,654 12,246,124

Deposits from customers 1,158,421,656 1,054,122,573 962,486,292 711,038,787 651,145,758

Other liabilities 77,054,502 69,872,456 45,275,666 47,761,799 80,995,080

Current income tax liabilities 11,732,712 15,340,116 13,760,343 8,686,276 2,373,006

Deferred tax liabilities 5,670,120 3,225,418 3,308,557 4,708,122 6,348,353

Debt securities issued 13,228,726 13,238,291 13,233,169 68,370,952 67,403,227

Other borrowed funds 169,879,450 169,194,418 229,647,220 20,931,341 12,390,288

Total liabilities 1,437,418,132 1,332,163,593 1,289,347,489 866,858,931 832,901,836

Equity

Capital and reserves attributable to equity holders of the parent entity

Share capital 14,715,590 14,715,590 14,715,590 11,658,594 9,326,875

Share premium 123,471,114 123,471,114 123,471,114 119,076,565 119,076,565

Retained earnings 41,132,507 47,558,325 31,560,746 19,976,375 17,114,337

Other components of equity 119,818,839 102,408,601 64,432,606 65,733,651 54,534,995

Total equity attributable to owners of the Bank 299,138,050 288,153,630 234,180,056 216,445,185 200,052,772

Total equity 299,138,050 288,153,630 234,180,056 216,445,185 200,052,772

Total equity and liabilities 1,736,556,182 1,620,317,223 1,523,527,545 1,083,304,116 1,032,954,608

262


Five Year Financial Summary Cont'dStatement of comprehensive income

BankIn thousands of Nigerian Naira Jun-2013 Jun-2012 Jun-2011 Jun-2010 Jun-2009

Interest income 86,280,338 79,179,733 57,800,758 56,068,095 61,523,389

Interest expense (21,799,503) (17,677,481) (10,595,000) (17,849,268) (25,987,094)

Net interest income 64,480,835 61,502,252 47,205,758 38,218,827 35,536,295

Loan impairment charges (1,107,877) (1,707,356) (7,478,091) (2,796,976) (24,113,926)

Net interest income after loan impairment charges 63,372,958 59,794,896 39,727,667 35,421,851 11,422,369

Fee and commission income 21,615,202 22,012,856 19,793,874 16,640,666 16,334,346

Fee and commission expense (452,538) (747,079) (1,436,180) (1,467,085) (341,741)

Net fee and commission income 21,162,664 21,265,777 18,357,694 15,173,581 15,992,605

Net gains/(losses) on financial instruments classified as held for trading 2,711,183 2,069,859 1,071,840 820,414 3,610,428

Net income from derivative instruments held for risk management purposes - - - - -

Other income 4,554,382 2,859,975 6,102,985 1,868,972 2,792,324

Other income 7,265,565 4,929,834 7,174,825 2,689,386 6,402,752

Total Operating income 91,801,187 85,990,507 65,260,186 53,284,818 33,817,726

Net impairment loss on financial assets - - (1,181,354) - (2,527,475)

Net operating income after net impairment loss on financial assets 91,801,187 85,990,507 64,078,832 53,284,818 31,290,251

Personnel expenses (9,705,384) (8,213,674) (7,751,433) (7,789,496) (6,929,666)

General and administrative expenses (10,724,159) (10,299,338) (10,229,594) (11,773,823) (7,705,228)

Operating lease expenses (306,534) (383,482) (275,359) (252,016) (248,765)

Depreciation and amortization (4,458,684) (3,767,274) (3,176,182) (2,894,881) (2,528,186)

Other operating expenses (12,167,615) (10,478,913) (8,176,290) (6,570,807) (3,860,022)

Total expenses (37,362,376) (33,142,681) (29,608,858) (29,281,023) (21,271,867)

Profit before income tax 54,438,811 52,847,826 34,469,974 24,003,795 10,018,384

Income tax expense (7,326,577) (8,141,325) (5,126,280) (7,080,479) 1,111,057

Profit for the period from continuing operations 47,112,234 44,706,501 29,343,694 16,923,316 11,129,441

Profit for the period from discontinued operations - - - - -

Profit for the period 47,112,234 44,706,501 29,343,694 16,923,316 11,129,441




– Basic 1.60 1.52 1.00 0.73 0.60

– Diluted 1.60 1.52 1.00 0.73 0.60




– Basic 0.00 0.00 0.00 0.00 0.00

– Diluted 0.00 0.00 0.00 0.00 0.00

Declared Dividend per share * - - - -

263

Share Capitalization History Guaranty Trust Bank and Subsidiary Companies

264

Share Capitalisation History Year Authorised Issued Increase Cumulative Increase Cummulative No. Of Shares Consideration 1991 25,000,000 25,000,000 25,000,000 25,000,000 25,000,000 Cash 1992 35,000,000 60,000,000 NIL 25,000,000 25,000,000 Nil 1993 NIL 60,000,000 25,000,000 50,000,000 50,000,000 Scrip 1994 40,000,000 100,000,000 NIL 50,000,000 50,000,000 Nil 1995 NIL 100,000,000 50,000,000 100,000,000 100,000,000 Scrip 1996 100,000,000 200,000,000 300,000,000 400,000,000 400,000,000 Cash 1997 300,000,000 500,000,000 600,000,000 1,000,000,000 1,000,000,000 Scrip 1998 250,000,000 750,000,000 500,000,000 1,500,000,000 1,500,000,000 Scrip 1999 NIL 750,000,000 NIL 1,500,000,000 1,500,000,000 Nil 2000 NIL 750,000,000 NIL 1,500,000,000 1,500,000,000 Nil 2001 250,000,000 1,000,000,000 500,000,000 2,000,000,000 2,000,000,000 Ipo 2002 1,000,000,000 2,000,000,000 500,000,000 2,500,000,000 2,500,000,000 Scrip 2003 NIL 2,000,000,000 500,000,000 3,000,000,000 3,000,000,000 Scrip 2004 1,000,000,000 3,000,000,000 1,000,000,000 4,000,000,000 4,000,000,000 Scrip 2004 NIL 3,000,000,000 2,000,000,000 6,000,000,000 6,000,000,000 Public Offer 2005 2,000,000,000 5,000,000,000 NIL 6,000,000,000 6,000,000,000 Nil 2006 NIL 5,000,000,000 2,000,000,000 8,000,000,000 8,000,000,000 Scrip 2007 2,500,000,000 7,500,000,000 2,000,000,000 10,000,000,000 10,000,000,000 Scrip 2007 NIL 7,500,000,000 3,679,415,650 13,679,415,650 13,679,415,650 GDR Underlying Shares 2008 7,500,000,000 15,000,000,000 1,243,583,241 14,922,998,890 14,922,998,890 Scrip 2008 NIL 15,000,000,000 3,730,749,723 18,653,748,613 18,653,748,613 Scrip 2009 NIL 15,000,000,000 4,663,437,153 23,317,185,766 23,317,185,766 Scrip 2010 15,000,000,000 30,000,000,000 NIL 23,317,185,766 23,317,185,766 Nil 2010 20,000,000,000 50,000,000,000 5,829,296,442 29,146,482,207 29,146,482,207 Scrip 2011 NIL 50,000,000,000 284,697,017 29,431,179,224 29,431,179,224 IFC Special Placement 2012 NIL 50,000,000,000 NIL 29,431,179,224 29,431,179,224 Nil 2013 NIL 50,000,000,000 NIL 29,431,179,224 29,431,179,224 Nil

Share Capitalization History Guaranty Trust Bank and Subsidiary Companies

265

Dividend History

Ten-year dividend and unclaimed dividend history as at 30th June 2013

Dividend No. Dividend Type Financial Year Ended Total Dividend Amount Declared

Dividend Per Share Net Dividend Amount Unclaimed as at 30/06/2013

Percentage Dividend Amount Unclaimed

Payment 20 Interim 28-Feb-02 495,000,000.00 33 kobo 13,248,738.88 2.68% Payment 21 Final 28-Feb-02 1,000,000,000.00 50 kobo 23,529,878.51 2.35% Payment 22 Interim 28-Feb-03 625,000,000.00 25 kobo 5,150,352.33 0.82% Payment 23 Final 28-Feb-03 875,000,000.00 35 kobo 129,998.57 0.01% Payment 24 Interim 29-Feb-04 750,000,000.00 25 kobo 5 ,088,867.26 0.68% Payment 25 Final 29-Feb-04 1,350,000,000.00 45 kobo 46,886,264.15 3.47% Payment 26 Interim 28-Feb-05 1,000,000,000.00 25 kobo 56,773,614.62 5.68% Payment 27 Final 28-Feb-05 2,700,000,000.00 45 kobo 82,519,452.72 3.06% Payment 28 Interim 28-Feb-06 1,500,000,000.00 25 kobo 68,185,632.50 4.55% Payment 29 Final 28-Feb-06 4,200,000,000.00 70 kobo 171,162,933.78 4.08% Payment 30 Interim 28-Feb-07 2,000,000,000.00 25 kobo 203,326,119.74 10.17% Payment 31 Final 28-Feb-07 4,000,000,000.00 50 kobo 230,413,300.53 5.76% Payment 32 Interim 28-Feb-08 3,419,853,912.50 25 kobo 266,672,617.72 7.80% Payment 33 Final 28-Feb-08 9,575,590,955.00 70 kobo 665,919,094.23 6.95% Payment 34 Final 31-Dec-08 14,922,998,891.00 100 kobo 1,031,721,260.66 6.91% Payment 35 Final 31-Dec-09 13,990,311,460.50 75 kobo 1,001,962,892.86 7.16% Payment 36 Interim 31-Dec-10 5,829,296,441.75 25 kobo 395,918,330.76 6.79% Payment 37 Final 31-Dec-10 17,487,889,325.37 75 kobo 1,220,855,231.22 6.98% Payment 38 Interim 31-Dec-11 7,286,620,552.30 25 Kobo 512,691,680.21 7.04% Payment 39 Final 31-Dec-11 25,016,502,340.40 85 Kobo 1,726,147,516.71 6.90% Payment 40 Interim 31-Dec-12 7,357,794,806.00 25 Kobo 589,276,660.43 8.01% Payment 41 Final 31-Dec-12 38,260,532,000.00 130 Kobo

guaranty trust bank plc and subsidiary companies · 2018-05-15 · core values to its employees...

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